TMI Blog1956 (8) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... ajasekhara amounting to ₹ 8,124 and ₹ 8,381, were added under the provisions of section 16(3)(a)( ii) of the Act. The assessee, however, was granted earned income relief only on the basis of his individual share, ₹ 9,812. In the assessment year 1950-51, the share of the assessee, Marimuthu, in the profits of the partnership amounted to ₹ 12,344. Bhaskara had meanwhile become sui juris. Under the provisions of section 16(3)(a)( ii) Rajasekhara's share ₹ 10,143 was included in computing the total income of Marimuthu. But the assessee was granted earned income relief only on the basis of his own share, ₹ 12,344. The assessee's contention, that earned income relief should be calculated also with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ins of business, profession or vocation' where the business, profession or vocation is carried on by the assessee or, in the case of a firm, where the assessee is a partner actively engaged in the conduct of the business, profession or vocation;........and includes any such income which, though it is the income of another person, is included in the assessee's income under the provisions of this Act........ . The question referred to us is really to be answered with reference to the scope of such income , which, though it is the income of another person, is included in the assessee's income under the provisions of this Act. We are concerned in this case only with the income chargeable under the head Profits and gains of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atisfied would have been (1) the income must be that of the assessee, (2) that the income should be chargeable to tax under the head profits and gains of business, and (3) in the case of those profits and gains of business having been earned by a firm, the assessee should be a partner actively engaged in the conduct of the business. Obviously the first of these tests cannot be satisfied, where the income of another person is included in the income of the assessee for purposes of computation of the assessee's total income or of its assessment to tax. Therefore in construing the scope of the expression such income in the concluding portion of section 2(6AA) the fact that the ownership of income vested in a person other than the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the provisions of this Act is his earned income though it may accrue in law to another person. Thus where an assessee's wife is a partner, or his minor child is admitted to the benefits of the partnership, in a firm of which the assessee is a partner, the wife's or child's share of profits is included in the assessee's total income under section 16(3) and it would be regarded as the assessee's earned income if he is actively engaged in the conduct of the partnership business . The learned counsel for the respondent pointed out that in Sampath Ayyangar's Indian Income-tax Act, Volume 2, 4th edition, page 120, the learned author observed : ....On the language of clause (c) under discussion which runs and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is deemed to be his by any legal fiction, is assessed to tax. Sections 16(1)(c), 16(3), 23A and 44D are instances of such legal fictions. They would all be cases of income of another person included in the assessee's income within the meaning of the last clause of section 2(6AA) of the Act. Since it is only the assessee that can claim earned income relief, such income , as that expression has been used in section 2(6AA), must be the income only of the assessee, though it has to be viewed as his income only by recourse to one or the other of the legal fictions enacted by the Act. The expression such income has, in our opinion, to be construed as income on which the assessee has to be assessed to tax. That may, as in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruction that the activity posited in the case of income falling within the inclusive portion of the definition in section 2(6AA) is that of some person other than the assessee. Sub-sections (1) and (2) of section 44D which are relevant in the present context run : 44-D. (1) Where any person has, by means of a transfer of assets, by virtue or in consequence whereof, either alone or in conjunction with associated operations, any income which if it were the income of such person would be chargeable to income-tax becomes payable to a person not resident or to a person resident but not ordinarily resident in the taxable territories, acquired any rights by virtue or in consequence of which he has within the meaning of this section power to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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