TMI Blog1983 (8) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... under the name and style of M/s Karam Singh Assessee Singh as commission agents at Khanna. With effect from 31st July, 1974, Gurbachan Kaur w/o Gurbachan Singh and Sant Kaur w/o Apar Singh Joined the firm and Manjit Singh, minor, was admitted to the benefits of the partnership. There was reallocation of the shares so as to allocate the shares of profits to the five major partners and the minor admitted to the benefits of the partnership, and the losses to be shared by the major partners. Clause 7 of the instrument of that date provided that: "The capital of the partners is as per respective khatas of the parties. It may increase or decrease according to the scope and extent of the business. It may consist of such sum or sums of money as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessments were challenged in appeal before the AAC. 3. The AAC taking into consideration the submissions made before him and the authorities cited, held that in view of the judgement of the Supreme Court in the case of CIT vs. Prem Bhai Parekh Ors. (1970) 77 ITR 27 (SC) and the decision of the Income-tax Appellate Tribunal in I.T.A. No. 681/Chandi/80 dt. 27th March, 1982, there was no case for inclusion of the share income of Gurbachan Kaur from the total income of the assessee for each of the assessment years under appeal. Hence, the grievance of the revenue in these appeals. 4. The parties have been heard. It was contended on behalf of the revenue that in view of the ratio laid down in the following judgements and the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that case that the capital invested by the minors in the firm came from the gift made in their favour by their father, i.e., the assessee, in whose case income falling to the share of the minors was included. On these facts, the Hon'ble Supreme Court observed that before any income of a minor child can be brought within the scope of s. 16(3)(a)(iv), it must be established that the said income arose directly or indirectly from assets transferred directly or directly by his father. There is no dispute that the assessee had transferred to each of his minor sons, a sum of Rs. 75,000. It May also be that the amount contributed by those minors as their shares in the firm came from those amounts. "But the question still remains whether it can be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equally responsible for profit and losses and running of the business, as is evident from cls. 7, 8 and 9 of the partnership deed. 7. In the case of Smt. Mohini Thapar, the issue was entirely different as in that case the assessee made certain cash gifts to his wife and purchased certain shares and invested the balance in deposits, income from which was to be considered for taxation purposes. On these facts, it was held that the transfers in question were direct transfers and the income realised by the wife was income indirectly received in respect of the transfer of cash directly made by the assessee. In that case, there was a proximate connection between the income and the transfer of assets made by the assessee. In the case before me, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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