TMI Blog2004 (9) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... rest income in question and it was not includible under section 64(1)(iii) - In view of the foregoing discussion, we answer the question referred to us in the affirmative, i.e., in favour of the assessee - - - - - Dated:- 27-9-2004 - Judge(s) : R. K. AGARWAL., K. N. OJHA. JUDGMENT The judgment of the court was delivered by R.K. Agarwal J. - The Income-tax Appellate Tribunal, Allahabad, has referred the following question of law under section 256(2) of the Income-tax Act, 1961, hereinafter referred to as "the Act", for the opinion of this court: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the interest credited to the account of the minor in the books of the firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the provisions of section 64(1)(iii) of the Act the interest of Rs. 5,529 accrued to the account of the minor was includible in the assessable income of the respondent. He relied upon the following decisions:(i) Puspa Devi v. CIT [1993] 203 ITR 42 (All); (ii) CIT v. Sri Ram Ratan [1996] 217 ITR 692 (All); (iii) CIT v. Smt. Savitri Devi [1997] 227 ITR 631 (All) ; and (iv) I.T.R. No. 217 of 1983 - CIT v. Subhash Chand [2005] 273 ITR 216 (All) decided on August 3, 2004. Sri Rithik Upadhyaya, learned counsel for the respondent, however, submitted that under the partnership deed the minor was not required to contribute any income towards capital and the interest had accrued on the separate funds which had been advanced by him, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee under section 64(1)(iii) of the Act, notwithstanding that the assessee has no income of her own from any source whatsoever. In the case of Sri Ram Ratan [1996] 217 ITR 692 this court has held that where the amounts subsequently deposited were credited in the capital account of the minors and no separate account was maintained nor were such subsequent amounts shown as loans in the balance-sheet of the year, the interest credited to the account of the minor would be as a result of the admission to the benefits of the partnership and includible under section 64(1)(iii) of the Act. In the case of Smt. Savitri Devi [1997] 227 ITR 631 this court has held that the interest accruing on the capital investment by the minors in the firm wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to income-tax in the hands of the father or mother as the case may be. To put it differently, there has to be a nexus between the income of the minor, and his admission to the benefits of the partnership. Applying the principles laid down in the aforesaid cases to the facts of 9 the present case, we find that in the present case the Tribunal has recorded a categorical finding that the minor had advanced the loan to the firm out of his separate funds on which interest was paid and it did not have any direct or indirect nexus with the admission of the minor to the benefit of the firm. In this view of the matter, there is no material on record to show that the said income has any direct or indirect nexus with the interest income in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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