Income accruing or arising in the hands of minor is added to parent’s total income

SIBI Joy Vs ITO (TDS) (Kerala High Court)

Kerala High Court held that provisions of section 64(1)(v) of Income Tax Act clearly states that income accruing or arising in the hands of a minor child will be added to the parent’s total income.

Facts- The writ petition has been filed challenging order of the 1st respondent and 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).

Conclusion- It is clear from the provision that income accruing or arising in the hands of a minor child will be added to the parent’s total income. Exceptions are provided only if income arises or accrues to the minor child on account of any manual work done by him or any activity involving application of his skill, talent or specialized knowledge and experience. The Income Tax Act, does not exempt the interest income accruing to 2nd petitioner on an amount received as part of death benefits of her deceased father even if, by order of Court, that income can be utilized only after the minor attains majority. The contention that the income can be taxed only after the minor attains majority cannot be accepted, as the income has accrued, on the bank crediting the account of the 2nd petitioner every year with the amount of interest payable. M.R. Doshi proceeds on the proper interpretation to be placed on the provisions of Section 64(1)(v) of the Act.

FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT

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