TMI Blog1982 (11) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... no dispute that the income of the wife has to be aggregated under section 64 of the Income-tax Act, 1961 ('the Act'). It is, however, the assessee's case that interest element should be segregated on the ground that there was no stipulation for investment of any amount of capital before she was taken as a partner. Neither the ITO nor the first appellate authority agreed with the assessee's claim. It was found that there was only one capital account and that there was nothing in the partnership deed to suggest that it was not necessary for the lady to have contributed any capital. It was claimed that the decisions of S. Srinivasan v. CIT [1967] 63 ITR 273 (SC) and Smt. Nripendrakumari Bhandari v. CIT [1976] 105 ITR 158 (Mad.) justified excl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent from the profits and that it will have to be automatically aggregated if the profits themselves, can be aggregated. We would, however, take the view in this case that it cannot be so automatically aggregated. There is authority for this broader view in the decision of the Madras High Court in Smt. Nripendrakumari Bhandari's case where interest on moneys paid to the credit of partner was held to be not capable of being aggregated under section 64, as the minor admitted to the benefits of partnership was not so admitted for his deposits in the firm. Even the fact of a reference to the interest on such accounts in the partnership deed, it was held, did not justify the aggregation. Though we would follow this broader view, we are not in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not in a position to say that the interest has a separate identity from the share of profit. In the case of Smt. Nripendrakumari Bhandari, it was a case of admission of a minor to the benefits of partnership. It is not a matter of contractual relationship as between adults. There were two accounts for partners---one as fixed capital account on which no interest was paid and the other towards loan on which interest at 7.5 per cent was found payable. It was in this context that the interest at 7.5 per cent on loan amount was considered to be outside the scope of section 64. The facts in the assessee's case are totally different. There is every circumstance to indicate that she became a partner by virtue of her capital contribution. Hence, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
