Point of Law: If this income were to be taxed only after the 2nd respondent attains majority, financial burden on the 2nd petitioner when she attains age of majority will be huge.

JUDGMENT :

1. The writ petition has been filed challenging Ext. P5 order of the 1st respondent and Ext. P6 order of the 2nd respondent. According to the petitioners, the income (interest on fixed deposits) accruing to the 2nd petitioner - a minor - cannot be clubbed with the income of the 1st petitioner and that tax at source cannot be deducted in respect of the interest income accruing on the fixed deposit under the provisions of the Income Tax Act, 1961 (the Act).

2. The facts of the case, in brief, are that the 1st petitioner herein is a regular income tax assessee. The 2nd petitioner (minor) is the daughter of the 1st petitioner. The husband of 1st petitioner/father of the 2nd petitioner, Vinod Easaw Varghese, died in an accident. The 1st Addl. Subordinate Judge’s Court, Thiruvananthapuram, vide Ext.P3 order in OP (Succession) No. 44/2008 (dated 12.11.2009), held that the 1st petitioner is entitled to 1/3rd share and that the 2nd petitioner is entitled to 2/3rd share from the estate of the deceased, which includes amounts received as compensation owing to the death of the aforesaid Vinod Easaw Varghese. In terms of Ext.P3 order, the 2nd petitioner’s share was to be deposited as a fixed deposit in the State Bank of India, and the fixed deposit receipt was to be produced before the Court for safe custody until the 2nd petitioner attains majority. It is the case of the petitioners that the 3rd respondent Bank cannot deduct tax at source under S.194 A of the Act on the interest income accruing annually on the said fixed deposit of the 2nd petitioner. The petitioners preferred Ext.P4 application under section 197 (1) of the Act before the 1st respondent seeking a certificate for non-deduction of tax with respect to interest accruing annually on the said fixed deposit. The 1st respondent vide Ext.P5 order rejected the said application on the ground that the income of the minor has to be clubbed with the income of the 1st petitioner (mother of the 2nd petitioner), for the purpose of taxation under the Act. A revision petition was preferred under Section 264 of the Act before the 2nd respondent, who vide Ext.P6 order (dated 02.11.2012), did not find any ground to issue any directions in exercise of jurisdiction under Section 264 of the Act. The petitioners are therefore before this Court under Article 226 of the Constitution of India.

3. Sri. D.S. Sreekumaran, the learned counsel appearing for the petitioners would contend that the petitioners were entitled to the death benefits of the deceased from his employer and also as part of the motor vehicle accident claim. It is submitted that the 2/3rd share of the death benefits (an amount of Rupees Sixty lakhs) was deposited in the name of the 2nd petitioner as per Ext.P3 order of the Court and that the fixed deposit receipt is produced before the Court for safe custody. It is submitted that since the order of the Court clearly stipulates that any payment to be made to the minor only when she attains majority, any benefit (interest income) arising out of the fixed deposit will also be received by the 2nd petitioner only when she attains majority. It is submitted that in the absence of receipt of any income in the intervening period, tax cannot be deducted at source. It is submitted that since immediate or deferred payment of benefit is not available to the 2nd petitioner during her minority and the benefit of the fixed deposit together with accumulated interest is payable only after she attains majority; tax cannot be deducted u/s 194 A. It is contended that the 1st respondent, without appreciating the peculiar fact circumstances in the present case, issued Ext.P5 order. The learned counsel pointed out that, in view of the aforesaid order, the income of the 2nd petitioner has to be clubbed with the income of the 1st petitioner (mother of the 2nd petitioner) as per Section 64(1A) of the Income Tax Act and that the 1st petitioner is made liable to pay tax for the interest income with respec