TMI Blog2023 (4) TMI 393X X X X Extracts X X X X X X X X Extracts X X X X ..... rued, on the bank crediting the account of the 2nd petitioner every year with the amount of interest payable. The ground of extreme hardship to the 1st petitioner if she is required to pay tax on the income accruing to the minor is no ground to hold that the income cannot be clubbed with that of the 1st petitioner. Harshness in a statutory provision is no ground to hold that it should not be applied in a given case. If this income were to be taxed only after the 2nd respondent attains majority, the financial burden on the 2nd petitioner when she attains the age of majority will be huge. Moreover it would be practically impossible to get the credit of the tax deducted at source, by the bank in the year in which the minor attains majority. Further the financial hardship to the 1st petitioner does not appear to be so great as projected in the writ petition. The tax deducted at source by the 3rd respondent bank as per section 194 A (10%) will be available as credit, (Rule 37BA of the Income Tax Rules, 1962). The benefit of threshold exemption is also available. The provisions of Sections 5 of the Act have no relevance in determining the questions raised. The 2nd petitioner is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st petitioner (mother of the 2nd petitioner), for the purpose of taxation under the Act. A revision petition was preferred under Section 264 of the Act before the 2nd respondent, who vide Ext.P6 order (dt. 02/11/2012), did not find any ground to issue any directions in exercise of jurisdiction under Section 264 of the Act. The petitioners are therefore before this Court under Article 226 of the Constitution of India. 3. Sri. D.S. Sreekumaran, the learned counsel appearing for the petitioners would contend that the petitioners were entitled to the death benefits of the deceased from his employer and also as part of the motor vehicle accident claim. It is submitted that the 2/3rd share of the death benefits (an amount of Rupees Sixty lakhs) was deposited in the name of the 2nd petitioner as per Ext.P3 order of the Court and that the fixed deposit receipt is produced before the Court for safe custody. It is submitted that since the order of the Court clearly stipulates that any payment to be made to the minor only when she attains majority, any benefit (interest income) arising out of the fixed deposit will also be received by the 2nd petitioner only when she attains majority. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioners that, in the present case, taxation of income in the hands of the 1st petitioner is legally unsustainable. Reference is made to Sections 5 145 of the Act. It is also submitted that the respondents have no jurisdiction to change the order of Sub Court with respect to the said fixed deposit and the department can initiate action to collect tax from the 2nd petitioner only when she becomes major. It is submitted that if the interest income accrued from the said fixed deposit is clubbed with that of the 1st petitioner s income, the same will result in payment of heavy tax by the 1st petitioner. It is contended that, if the provisions of section 64(1A) provide for the clubbing of income (whether received or not) of the minor that would render the provision ultra vires the Constitution of India as it requires an individual assessee to pay tax on an income that the minor is not entitled to receive during her minority. It is contended that the intention and purpose of enactment would not be to cause a heavy burden on another person who is not receiving any benefit out of the interest income accrued annually. It is contended that the same is in violation of the principles of natura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax Act. The learned counsel would contend that the decision rendered by the Supreme Court in M.R. Doshi (supra) is not applicable to the present case. It is contended that the case relates to a trust deed created in favor of a minor and the income was to vest in the minor only after the attainment of majority and thus there was deferment of benefit until such time and the assessment of the benefit in the hands of the parent on any earlier occasion was against the provisions of section 64(1)(v). It is contended that the provisions of section 64(1)(v) [since deleted] are materially different from the S.64(1A) of the Income Tax Act and, therefore, the interpretation given by the Supreme Court to Section 64(1)(v) of the Act cannot be applied while interpreting the provisions of section 64(1A) of the Act. The learned counsel also submitted that the decision in Kapoor Chand (supra) relates to trust created for the benefit of two minor children and, therefore, is not applicable to the present case. It is contended that, in the present case, section 64(1A) of the Act requires the clubbing of the minor s income with that of the parent when it accrues to the minor. It is furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the income can be taxed only after the minor attains majority cannot be accepted, as the income has accrued, on the bank crediting the account of the 2nd petitioner every year with the amount of interest payable. M.R. Doshi (supra) proceeds on the proper interpretation to be placed on the provisions of Section 64(1)(v) of the Act. That provision (as extracted in the judgment) reads as follows: - 64. In computing the total income of any individual, there shall be included all such income as arises directly or indirectly *** (v) to any person or association of persons from assets transferred otherwise than for adequate consideration to the person or association of persons by such individual, to the extent to which the income from such assets is for the immediate or deferred benefit of his or her spouse or minor child (not being a married daughter) or both. On an interpretation of that provision, it was held: - 5. As the facts show, the trusts in the present case have this cumulative effect, that the income therefrom is to be accumulated until the attainment of majority by the assessee's three sons; the cumulative income is then to be divided in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the view taken by the Madras High Court. A statutory provision can be declared unconstitutional only on the following 1rounds; (i) Violation of the fundamental rights guaranteed under Part-III of the Constitution; (ii) Lack of legislative competence; (iii) Violation of the basic structure doctrine; and (iv) Manifest arbitrariness {vide Shayara Bano and others v. Union of India and others , (2017) 9 SCC 1 }. None of these grounds are made out. 7. The ground of extreme hardship to the 1st petitioner if she is required to pay tax on the income accruing to the minor is no ground to hold that the income cannot be clubbed with that of the 1st petitioner. Harshness in a statutory provision is no ground to hold that it should not be applied in a given case. Moreover, I am of the view that if this income were to be taxed only after the 2nd respondent attains majority, the financial burden on the 2nd petitioner when she attains the age of majority will be huge. Moreover it would be practically impossible to get the credit of the tax deducted at source, by the bank in the year in which the minor attains majority. Further the financial hardship to the 1st petitioner does not appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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