24 December 2014
The income, unless it is of exempt nature shall be taxable in India as both the child and parents are resident in India.
Once both the parent and child are resident, the source of the income is not relevant factor as for the residents, the global income is taxable in India.
The relevant question is - in whose hands the income so earned shall be taxed?
it would normally be taxable in the hands of the parent with higher income as a new born child is highly unlikely to earn any income out of exercise of his/her skills. However, in case the kid is exercising his/her skills such as being a baby in a TV show, such income is to be taxed against his/her only. In such a case, the parents will have to obtain PAN for the kid and act has his/her representatives till he achieve majority at age of 18.
25 December 2014
in your support, you may refer to 179 ITR 62. However, this case law only resulted in removal of penalties levied under 271.
The question before the high court didn't explore whether the income was to be included in either of the parent or not, which I believe should ideally be settled on the principal of intent of legislation.