Clubbing of Income

Last updated: 04 November 2008

Court :
Allahabad High Court

Brief :
Whether interest income on accumulated profits of minor who is partner in a firm, will be included in the total income of parent?

Citation :
Smt. Nisha Rani Agarwal Vs. C.I.T. 01/05/2007 [2007] 294 ITR 46

Held by the Honourable Court that, the interest accrued or paid on accumulated profits cannot be said to be a "benefit of partnership" and section 64(1)(iii) permits adding or clubbing to the income of the assessee only the income of a minor child of the assessee which arise from the "benefit of partnership". Therefore interest income on accumulated profits of minor who is partner in a firm, will not be included in the total income of parent.