TMI Blog1979 (10) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... terest 1. Rameshchandra Vaktavarmal M/s Ganeshmal Pratapmal Co. 9,164 4,928 2. Jayantilal V. -do- 6,737 3,735 3. Suresh Kumar V. -do- 7,637 4,239 4. Ben Nila V. -do- 17,470 1,584 5. Bharatkumar V. M/s Bharatkumar Co. 5,480 4,608 The assessee while including the income by way of share of profit falling to the account of each of the minors as aforesaid did not include the income from interest on deposits with the said firms. According to the assessee provisions of s. 64(1)(iii) of the Act were not applicable in so far as the amount of interest earned by the minors on their account with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether the amounts of interest earned by the minors on the accounts standing to their credit with the respective firms were includible in the hands of the assessee under the provisions of s. 64(iii) of the Act. It may be stated that no material was placed before us by Revenue to show that contribution of capital was condition precedent for admission of the minors to the benefits of partnership. In absence of such stipulation the assessee's case would squarely fall within the principles laid down in the case of Bhogilal Laherchand. In that case the facts were these:- "The assessee started a partnership business with his major son and admitted to the benefits of this partnership his two minor sons. In the relevant asst. yr. The share of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Bombay is a binding decision. 5. A similar controversy arose in a recent decision before the Bombay High Court in case of S.V. Nashte (2). In that case the facts were these: "A firm was constituted under an instrument of partnership with five partners, i.e. the assessee and his four major sons. Three minor sons of the assessee were admitted to the benefits of the partnership. Two minor sons contributed a capital of Rs. 42,753 and the other son contributed a capital of Rs. 25,000. The capital contributions made by the three minor sons of the assessee came out of assets received by them on a partial partition of their HUF. The assessee, in his capacity as guardian of his three major sons, instructed the firm to transfer a sum of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount there after stood as loans advanced by the minors. Whether the loan came out of the capital, which was originally invested in the partnership firm whether the loan was made independently, would not be relevant because in either case the transaction could not be related, even remotely, to the admission of the minors to the benefits of the partnership either directly or indirectly. The minors received interest in their own right as lenders of money to the partnership firm and if it was not in any way related to their admission to the benefits of the partnership, it cannot be brought within the purview of s. 64(ii) of the Act". In coming to the above decision their Lordships have laid down the following principle. "Interest r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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