9911796707
TMI Blog2003 (12) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... had apparently accrued over a long period from 1974 to 1980, the firm having first been constituted in the year 1974 and later reconstituted in the year 1977. On April 1, 1980, the parties entered into an agreement which reads thus: "Whereas the parties to this deed along with minors C. Veerappan and C. Subramanian, all sons of the party of the first part are running the firm M/s. SVR Cycle Mart, Karaikudi, in which the above said two minors are admitted to the benefits of partnership and whereas the partners are having balances in their respective current accounts with the firm and whereas the parties expressed their intention to withdraw major balances in current accounts and whereas the business of the firm badly requires finance and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r having thereafter brought that amount to tax in the hands of the assessee by placing reliance on section 64(1)(iii) of the Act, the assessee took the matter in appeal successfully, but that success was shortlived as the Tribunal took the view that this amount is required to be taxed in the hands of the assessee. Section 64(1)(iii) of the Act, as it stood at the relevant time, that provision having been repealed with effect from April 1, 1993, reads as under: "In computing the total income of any individual, there shall be included all such income as arises directly or indirectly. . . . (iii) to a minor child of such individual from the admission of the minor to the benefits of partnership in a firm." The question which thus required c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm by these persons." Those observations of the court clearly point out that it is the absence of an arrangement or a contract to treat the accumulated undrawn profits as loans and deposits that resulted in the interest paid on those undrawn accumulations as having to be regarded as indirect benefits received by the spouse and the minors who had been admitted to the benefits of the firm. In this case, the undrawn accumulation had been, by an agreement among the parties, treated as deposits and the interest that was paid subsequently was only on that deposit and was not an amount paid as interest on the undrawn accumulation. The fact that the parties had voluntarily agreed that the undrawn accumulation would not be immediately drawn but ..... X X X X Extracts X X X X X X X X Extracts X X X X
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