1. This group of seven appeals seemingly simple, raises a thorny question under Mohammedan law whether the term child includes a step-child.2. In a firm by the name of New Bharat Hing Supply Co., Nadiad, there were two partners who were brothersAbdul Rahim Khan and Abdul Karim Khan (hereinafter referred to as Rahim and Karim, respectively) sharing equally in the profits. Karim expired on 12-11-1966 and his place was taken by his widow Smt. Ayshabegam and his two minor sons, the former as a partner and the latter as being admitted to the benefits of partnership. Rahim Khan married Smt. Ayshabegam on 22-2-1970. In the period relevant to the assessment year 1972-73, Smt. Ayshabegam retired from the partnership and the firm was reconstituted and the two minors were again admitted to the benefits of partnership. According to the ITO, from the date of this marriage the two minor children became the step-children of the assessee Rahim Khan and so he added their share income to the income of the assessee under Section 64(1)(ii) read with Section 2(15A) of the Income-tax Act, 1961 ('the Act'). This assessment order was made under Section 147 of the Act because at the time of the first assessment, the fact of the marriage of Rahim Khan with Ayshabegam not was disclosed to the department. Rahim Khan, the assessee, is a Sunni Muslim.
3. Before the AAC, the ITO's action was challenged firstly, on the ground that reopening was invalid and secondly, on the ground that clubbing of income under Section 664(l)(z7) read with Section 2(15A) was not valid. The AAC held that the reopening was valid but regarding applicability of the said Section 64(1)(ii) and Section 2(15A), he held that the relationship of father and minor child should be in existence when the minor child is admitted to the benefits of partnership. Since the minors became the step-children of the assessee after they were admitted to the benefits of partnership in this case, the said sections were not applicable. He has stated that even after the marriage the relationship between the assessee and the minor children was that of uncle and nephew. Therefore, after the change in the section from the assessment year 1976-77 also, the minors' income could not be clubbed with that of the assessee.
4. The learned departmental representative argued that it was not necessary that the minor should be a child of the assessee at the time of admission to the benefits of partnership. He further pointed out that from the assessment year 1972-73 the partnership was reconstituted and at that time the minors were the step-children of the assessee and, therefore, even according to the reasoning of the AAC, the income of the minors could be included in the income of the assessee.
5. The learned counsel for the assessee at the very outset pointed out that Section 2(15A) was introduced by the Taxation Laws (Amendment) Act, 1975, with effect from 1-4-1976 and, therefore, for the first four assessment years, 1972-73 to 1975-76, the income of the minors could not be clubbed with that of the assessee and that, therefore, reopening of assessments for those four years was invalid.
6. In cross objection Nos. 24 to 30 (Ahd.) of 1982, which were heard together with these appeals, we have held that reopening for the aforesaid four years was not valid and, accordingly, now we have to consider only the addition regarding the remaining three years, i.e., the assessment years 1976-77, 1977-78 and 1978-79.
7. The learned counsel for the assessee then put forward his further arguments regarding the merits that the relationship between the assessee and the minors continued to be that of an uncle and nephew even after the marriage. The assessee had not accepted the minors as his children and had not adopted them. He further pointed out that the estate duty was paid on the wealth left by the deceased Karim Khan and the same had been inherited by the minor sons. In support of his contention that on the marriage the minors did not become the step-children of the assessee, he has relied upon various observations from Mohammedan Law by B.R. Verma, Fifth edition, 1980. At page 101, it has been mentioned that a woman being married is entitled to visit and be visited by, inter alia, children from a former husband with reasonable frequency. From this, according to him, it followed that the children of the former husband could not stay "with the new husband as a matter of right. At page 107, it has been mentioned that the condition that new husband should maintain children of former husband would be a valid condition of marriage. This showed that the children had no automatic rights of maintenance from the new husband. It has been mentioned as follows : "Step children - It has been held that if a man married a widow with encumbrances he is usually expected to take over the encumbrances with the widow and feed them. But he is not bound to support except where there is an agreement for that purpose." (p.
236) At page 334, it has been mentioned that no step-relations have got mutual rights of inheritance, and that there is no tie of consanguinity between them. A step-son or a step-mother are not heirs. Thus, from the test regarding the rights of residence, maintenance and inheritance, the learned counsel for the assessee has sought to prove that the children of the former husband are not the step-children of the new husband. These factors regarding residence, maintenance and inheritance, he has connected to another consideration in this case, namely, that the purpose of Section 64 was to prevent diversion of income while at the same time maintaining control over it. Since the new husband had no such connection with the children of the former husband, he would have no control over their property and, accordingly, Section 64 would have no application in such a case. In support of his contention that the purpose of Section 64 was as stated above, he has relied upon the decisions of the Supreme Court in the cases of Balaji v. ITO [1961] 43 ITR 393, the observations at page 398, Tulsidas Kilachandv. CIT [1961] 42 ITR 1 and Sevantilal Maneklal Sheth v. CIT [1968] 68 ITR 503, observations at page 508. He also contended that the burden of proof in this case was on the department and that since Section 64 created an artificial income, it should be construed strictly relying upon the decision in the case of CIT v. Prem Bhai Parekh [1970] 77 ITR 27 (SC).
8. The learned departmental representative replied that the relationship of the new husband with the children of the former husband was an independent fact which was not to be judged by a reference to the rights of residence, maintenance or inheritance. According to him, the financial control over the minors was not necessary and that general control over them was sufficient. He argued that although the rights of the minors might depend upon the conditions of the marriage, those conditions not having been disclosed in this case it would follow as a matter of course that the minors were the step-children of the assessee under Section 2(15A). Therefore, according to him, Section 64 would automatically apply. He also contended that the question in Prem Bhai Parekh's case (supra) was quite different, namely, the strict construction regarding directness of the connection.
9. With regard to the arguments of the assessee's counsel on the purpose of Section 64, there can be no two opinions about its soundness. However, we have also to consider the question whether the child includes a step-child generally and the effect of Section 2(15A).
We have to consider whether the purpose of Section 64 would be an overriding factor irrespective of the clear meaning and applicability of Section 2(15A). The question is whether under Muslim law a child of a former husband is a step-child of the new husband because Section 2(15A) would apply only in such a case.
10. According to the learned counsel for the assessee, the purpose of Section 64 is all important while according to the learned departmental representative, Section 2(15A) is an overriding factor and taking that into consideration Section 64 is automatically applicable. These are extreme positions. In our view, both have to be taken into account. The above citations regarding rights of residence, maintenance and inheritance go to show the extent of control over and the relationship of the new husband with the children of the former husband. From those citations it is a matter of inference that new husband has no relationship with and obligations to the children of the former husband and that on marriage with the widow the children do not become the step-children of the new husband. However, it is necessary to know directly whether the children of the former husband become the step-children of the new husband on marriage with the widow and it is to this enquiry that we must address ourselves. In this connection, the point made by the learned departmental representative is quite valid that the relationship may exist apart from the rights of residence, maintenance or inheritance. However, our finding on this point is against him.
11. At page 82 of Taiyabji's Muslim Law, Fourth edition, it has been mentioned that a step-father and a step-mother are not related in law to their step-children . . . ." Step-parents and step-children considered no relations for the purpose of legal rights and liabilitiesBudday Sait v. Zoonoo Bee [1853] Mad. SDA 199 (' there being between th two no tie of consanguinity'), Mt. Begum v. Jalal Din [1917] 52 Punjab Re 182 (No. 60).
Muslim law regarding adoption throws some further light on this problem. Adoption is not recognized in Muslim law and adoption does not confer upon any person the status of a child except where there is a custom or is permitted by the provisions of any law for the time being in force. The custom of adoption was abrogated by a verse of the Quran.
Muslim law does not recognize it and it was forbidden by the Quran (ref. page 211 of Mohammedan Law of B.R. Verma, Fifth edition). The purpose of this is not to discuss Muslim law of adoption but to show the kind of parents-children relationship which Muslim law recognizes.
The above quotations, particularly from Taiyabji's work, show that consanguinity relationship of blood is the only relationship which is recognised under Muslim law, and that is why adoption has no place in it. In other words, the concept of step-children is unknown to Mohammedan law. Section 2(15A) would be applicable only if there can be step-children regarding an individual-assessee. If there cannot be any step-children, that section would not be applicable. Since in this case the minors are not step-children of the assessee, that section would not be applicable to his case. Therefore, now on both the counts (i) that the assessee's case does not come in any way within the purview of Section 64 ; and (ii) that the minors are not the step-children of the assessee, we must hold that the income of the minors cannot be included in the income of the assessee.