2001 (12) TMI 15

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..... d and allotted to the share of the son, the other floor being retained by the father. The son was obligated under the terms of the deed to pay a sum of Rs.1,250 to the assessee's wife and that payment was secured by a charge on the portion allotted to the son. Section 64(2) of the income-tax Act, which is a special provision providing for clubbing the income of the spouse and minor child with that of the individual in certain cases, in clause (c) of sub-section (2), as it stood during these assessment years, viz., assessment years 1978-79 to 1981-82, reads thus: "64. (2)(c) Where the converted property has been the subject-matter of a partition (whether partial or total) amongst the members of the family, the income derived from such co .....

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..... y while it is in the hands of the son. Payments made by the son, whether or not out of that fund or other funds cannot, in the hands of the recipient, be regarded as monies derived from the property. The immediate source of the payment for such recipient, is the person who pays. The fact that in the event of default of payment the mother was entitled to enforce a charge against the property does not also render the payment made by the son to the mother an amount which is derived from the property. The son being a major and capable of earning an income of his own can very well make the payments from any other source of income that he may have. There was nothing in the partition which required the son to set apart the income if any, derived .....

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..... n, unless such derivation is established as a matter of fact. No such evidence exists in this case. The only link with the property here is the charge created in favour of the wife for the purpose of securing the payment of the monies which the son is obligated to pay to his mother. The creation of a charge does not result in making the amount for which the charge is created an income from the property on which such charge is created. When a company borrows money from a bank and creates a charge on its assets in favour of the lender, it cannot possibly be said that the amount borrowed is an amount which was derived as income by the borrower from the assets owned by it and on which a charge is created. The occasion for enforcing a charge ar .....

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