Section 64(1)(iii) of the Income Tax Act, 1961, directs the inclusion of income arising to a minor child from admission to the benefits of partnership in a firm in the individual assessee's income, irrespective of whether the assessee's individual income is above or below the taxable limit.

( 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 28/03/1980, as modified by the order of the AAC, Vijayawada, the second respondent, in Appeal No. 17-G/80-81 dated 11/11/1980, and by the order of the Income-tax Appellate Tribunal, Hyderabad Bench B, Hyderabad, in I. T. A. No. 239/hyderabad/81 darted 27/01/1982, 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 9/09/1977, on a total income of Rs. 44,450. The income as returned by the assessee comprised of three items: Rs. 1. Property income 50 2. Share income earned by his three minor sons from M/s. Rajendrakumar Bafna and Co. , Guntur, under section 64 of the I. T. Act. 40,930

( 3 ) 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 assessees income as income received by the assessees wife from M/s. Rajendrakumar Bafna and 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 assessees there minor sons amounting to Rs. 41,000 from the assessees income. According to the assessee-petitioner, the provision of s. 64 (1) (iii) of the I. T. Act are applicable only if the assessees individual income as such is above the taxable limit and not where the assessees 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 28/03/1980. The assessee took the matter in appeal to the AAC, Vijayawada, who accepted the assessees contention and allowed the appeal and directed the ITO to delete the income accruing to the minors share from the computation of the assessee-petitioners 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 assessees income is above the taxable limit, the assessees minor childs 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 assessees spouse or the assessees minor child from such childs 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