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TMI Blog2023 (4) TMI 393X X X X Extracts X X X X X X X X Extracts X X X X ..... f 1st petitioner / father of the 2nd petitioner, Vinod Easaw Varghese, died in an accident. The Ist Addl. Subordinate Judge's Court, Thiruvananthapuram, vide Ext.P3 order in OP(Succession) No. 44/2008 (dated 12.11.2009), held that the 1st petitioner is entitled to 1/3rd share and that the 2nd petitioner is entitled to 2/3rd share from the estate of the deceased, which includes amounts received as compensation owing to the death of the aforesaid Vinod Easaw Varghese. In terms of Ext.P3 order, the 2nd petitioner's share was to be deposited as a fixed deposit in the State Bank of India, and the fixed deposit receipt was to be produced before the Court for safe custody until the 2nd petitioner attains majority. It is the case of the petitioners that the 3rd respondent Bank cannot deduct tax at source under S.194 A of the Act on the interest income accruing annually on the said fixed deposit of the 2nd petitioner. The petitioners preferred Ext.P4 application under section 197 (1) of the Act before the 1st respondent seeking a certificate for non-deduction of tax with respect to interest accruing annually on the said fixed deposit. The 1st respondent vide Ext.P5 order rejected the said a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 2nd petitioner during her minority, the interest income could not be clubbed with the income of the 1st petitioner. It is also submitted that the 2nd petitioner maintains a cash system of accounting, and therefore, clubbing of income u/s 64 (1A) of the Act in the hands of the 1st petitioner cannot be justified, as no amount (income) has actually been received by the petitioners. The learned Counsel submits that the 2nd respondent failed to appreciate the peculiar circumstance in which the petitioners are placed and erroneously refused to exercise jurisdiction under Section 264 of the Act. In support of his contentions, the learned counsel for the petitioners placed reliance on the judgment of the Supreme Court in Commissioner of Income Tax, Gujarat v M.R. Doshi (Dead) by Lrs. 1995 (supp) 3 SCC 464 (1995) 211 ITR 1) & Kapoor Chand v Asst. Commr. of Income Tax, (2015) 14 SCC 405, to buttress his contentions. Relying on the above decisions, it is contended for the petitioners that there is no immediate or deferred benefit for the minor during the period of her minority. The benefit is to be received only after the period of her minority; therefore, the petitioners are not liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that of 1st petitioner under section 64 (1A) of the Act. The learned counsel contends that, a reading of section 194A makes it clear that the bank with whom the fixed deposit is maintained has the liability to deduct tax at the applicable rate when the interest accrued in the fixed deposit is credited to any account. It is submitted that the bank has to credit the accrued interest after deducting tax at applicable rates so as to claim a deduction of the interest so paid as an expense in computing its (bank's) income each year. It is contended that section 194A mandates the deduction of tax at source at the happening of the earliest event of credit or payment. It is submitted that the credit of the interest takes place annually though the right to receive the interest along with the principal is postponed till the 2nd petitioner attains majority. It is submitted that since income accrues on the fixed deposit each year, such income is taxable as per the provisions of the Income Tax Act. It is submitted that there is no infirmity in Ext.P5 order of the 1st respondent, as also in Ext.P6 order of the 2nd respondent. It is submitted that the interest accruing annually on the fixed depos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... marriage of his parents subsists, in the income of that parent whose total income (excluding the income includible under this sub-section) is greater; or (b) where the marriage of his parents does not subsist, in the income of that parent who maintains the minor child in the previous year, and where any such income is once included in the total income of either parent, any such income arising in any succeeding year shall not be included in the total income of the other parent, unless the Assessing Officer is satisfied, after giving that parent an opportunity of being heard, that it is necessary so to do." It is clear from the provision that income accruing or arising in the hands of a minor child will be added to the parent's total income. Exceptions are provided only if income arises or accrues to the minor child on account of any manual work done by him or any activity involving application of his skill, talent or specialized knowledge and experience. The Income Tax Act, does not exempt the interest income accruing to 2nd petitioner on an amount received as part of death benefits of her deceased father even if, by order of Court, that income can be utilized only after th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts raised on the authority of the aforesaid judgments of the Supreme Court can only be rejected. 6. The contention of the learned counsel that the provisions of section 64(1A) of the Income Tax Act are ultra vires the Constitution of India, cannot be accepted. The question was considered by a Full Bench of the Madras High Court in K.M Vijayan and others v Union of India and others, (1995) 215 ITR 371 Mad, where it was held: - "33. In view of the foregoing reasons, we uphold the constitutional validity of sub-section (1A) of section 64 of the Income-tax Act. We also hold that it is within its legislative competence for Parliament to enact sub-section (1A) of section 64 of the Income-tax Act, since it falls under Schedule VII, List I, entry 82. Further, we hold that sub-section (1A) of section 64 of the Income-tax Act, 1961, is not violative of article 14 and article 19 of the Constitution. In that view of the matter, it is not possible to strike down sub-section (1A) of section 64 of the Income-tax Act as illegal, unconstitutional and ultra vires the Constitution as alleged by the petitioners. In the result, the writ petitions are dismissed. No costs" I am in complete agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X
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