Full Judgment
Madhav Reddy, Actg. C.J.
1. The assessee-petitioner seeks the issued of the writ of certiorari or any other appropriate writ to quash the order of the ITO, C-Ward, Guntur, the first respondent herein, in G.I.R. No. S-918/C/76-77 dated March 28, 1980, as modified by the order of the AAC, Vijayawada, the second respondent, in Appeal No. 17-G/80-81 dated November 11, 1980, and by the order of the Income-tax Appellate Tribunal, Hyderabad Bench 'B', Hyderabad, in I.T.A. No. 239/Hyderabad/81 darted January 27, 1982, and quash the same.
2. The assessee had returned an income of Rs. 41,085 for the assessment year 1976-77. The assessment was completed on September 9, 1977, on a total income of Rs. 44,450. The income as returned by the assessee comprised of three items:
Rs.1. Property income 502. Share income earned by his three minor sonsfrom M/s. Rajendrakumar Bafna & Co., Guntur,under section 64 of the I.T. Act. 40,9303. Other sources-interest 105--------41,085---------
3. The ITO while accepting the figures furnished by the assessee, under s. 64 of the I.T. Act added as sum of Rs. 3,299 to the assessee's income as income received by the assessee's wife from M/s. Rajendrakumar Bafna & Co. However, on appeal, the AAC deleted the above and computed the income at Rs. 41,160. The assessee late filed an application under s. 154 of the I.T. Act for rectifying the assessment order by deleting the income of the assessee's there minor sons amounting to Rs. 41,000 from the assessee's income. According to the assessee-petitioner, the provision of s. 64(1)(iii) of the I.T. Act are applicable only if the assessee's individual income as such is above the taxable limit and not where the assessee's income is below the taxable limit. The ITO was not convinced of the correctness of the contention of the assessee and dismissed his application filed under s. 154 of the I.T. Act by his order dated March 28, 1980. The assessee took the matter in appeal to the AAC, Vijayawada, who accepted the assessee's contention and allowed the appeal and directed the ITO to delete the income accruing to the minors' share from the computation of the assessee-petitioner's income under s. 64(1)(iii) of the Act. The Revenue took the matter in appeal to the Income-tax Appellate Tribunal. The Appellate Tribunal allowed the appeal and set aside the order of the AAC, on the short ground that upon an application under s. 154 of the I.T. Act only a rectification of the quantum of the tax a liability can be ordered and no income originally included in the taxable income could be excluded. The Appellate Tribunal did not express any opinion on the main contention that unless the individual assessee's income is above the taxable limit, the assessee's minor child's income from the admission of such minor to the benefits of partnership in a firm it cannot be computed. Inasmuch as the Appellate Tribunal has held that it cannot go into the merits of the case, a reference could not be sought and the assessee has, thereof invoked the jurisdiction of this court under art, 226 of the Constitution.
4. The relevant provision of s. 64 of the I.T. Act which direct the inclusion of all such income as arises directly or indirectly to a minor child of an individual from the admission of the minor to the benefits of partnership in a firm reads as follows:
'64.(1) In computing the total income of any individual, there shall be included all such income as arises directly or indirectly.....
(iii) to a minor child of such individual from the admission of the minor to the benefits of partnership in a firm;....'
5. It would be seen that, in certain cases, in computing the individual assessee' income, the income arising directly or indirectly to the assessee's spouse or the assessee's minor child from such child's admission to the benefits of partnership in a firm or from the assets transferee by the assessee for inadequate consideration to the minor are directed to be included in the income of the assessee. So far as s. 64(1)(iii) is concerned, it directs the inclusion of such income as artists directly or indirectly to a minor child or the assessee from the admission of the minor to the benefits of partnership in a firm. In the matter of such computation, no distinction is made on the basis sweetheart the individuals assessee has, on his own account, income above or below the taxable limit. On the contrary, it directs the inclusion of the income derived by the minor child from his admission the inclusion of the income derived by the minor child firm his admission to the benefits of partnership in a firm in computing the income of the individual. There is no ambiguity in the language of s. 64(1)(iii) of the I.T. Act so as to support the distinction sought to be drawn by the leaner counsel for the assessee-petitioner on the ground that such minor's income can be included in the individual assessee's income only in case the assessee has, an as individual, income above the taxable limit. We do s. 64(1)(iii) of the I.T. Act or on any principle of law. On the contrary this provision was inserted by the T.L. (Amend) Act, 1975, to bring all such income to tax which a view to plug the revision of tax by the assessee by transferring assets to the minors or by deriving income admitting the minors top the benefits of partnership in a firm. We are, therefore, not persuaded to accept the contention of the assessee-petitioner. The order of the ITO is justified not only on the ground that the major portion of the income returned by the assessee himself cannot the excluded from the computation of the assessee-petitioner's income, but also on the ground that such amounts was property included in arriving at his income for the assessment year 1976-77 and on the further ground that in an application under s. 154 of the I.T. Act that item cannot be directed to be excluded.
6. The writ petition, therefore, fails and it is accordingly dismissed.