The scope of clubbing the income of minor child has been noticed with the insertion of Section 64(1A) of Income Tax Act, 1961 and Section 6 of the Hindu Minority and Guardianship Act, 1956. Accordingly, the child is said to be minor, if he is under the age of his majority.

In this article we are stating that clubbing provisions in case of minor child’s income not at all unconstitutional.      

As per Section 64(1A) of the Act, the income of minor child is required to be clubbed with the income of the parent, whose income is higher, provided both parents stays together and where the marriage of the parents does not subsist i.e. where the parents are separated, then the income of minor will be includible in the income of that parent who maintains the minor child as per the court order in the relevant previous year.

As per Section 6 of the Hindu Minority and Guardianship Act, 1956, the natural guardian of a Hindu minor is the father and after him, his mother. It was a belief that since father was the Karta-Dharta of a family so he will be regarded as the first natural guardian Hindu minor child. Also, in this section “father” and “mother” do not include a step-father and a step-mother.

Recent Case:

It was held in the case of Anju Mehra vs. Union of India, that Sec 64(1A) of the Act was held contrary to the provisions of section 6 of Hindu Minority and Guardianship Act and violative of article 14 of Constitution, where Article 14 of our Constitution defines the equality before law.

Facts of the Case:

1. The assessing authority completed the assessment of the assessee under section 143(3) by clubbing the income of two minor sons of the assessee with the income of the assessee in her hands as her income was greater than that of her husband.

 

1. The assessee filed instant writ petition challenging constitutional validity of section 64(1A). It was the case of the assessee that the provisions of clubbing the income of the minor child, which is earned by the said minor in his or her own right, in the income of the parents infringed the right of equality as enshrined by article 14 of the Constitution of India and, thus, ultra vires.

It was further held, the case of the assessee that clause (a) of Explanation to section 64(1A) which provides that for the purposes of this sub-section, the income of the minor child shall be included where the marriage of his parents subsists, in the income of that parent whose total income is greater, was violative of section 6 of the Hindu Minority and Guardianship Act, 1956, according to which, the father is the natural guardian and after him the mother is the natural guardian.

Held:

The High Court in K.M. Vijayan v. Union of India upheld the constitutional validity of provisions of section 64(1A). In view of the aforesaid decisions, the assessee could not point out any illegality to the provisions of clubbing the income of the minor child, earned by him in his own right, in the income of the parents, but the assessee questioned that such income can only be clubbed in the income of the father, who is the natural guardian of the minor child under section 6 of the Hindu Minority and Guardianship Act. In view of interpretation by the Supreme Court, under the Hindu law both mother and father are the natural guardians of the minor sons or daughters. It cannot be said that the mother is not the natural guardian during the lifetime of the father or until he is disqualified from being the natural guardian. If that is so, then the contention raised by the assessee that clause (a) of Explanation to section 64(1A) which provides that for the purposes of this sub-section, the income of the minor child shall be included where the marriage of his parents subsists, in the income of that parent whose total income is greater, is contrary to the provisions of section 6 of the Hindu Minority and Guardianship Act and violative of article 14 of the Constitution does not arise.

 

The object of the provision is to tax the minor’s income in the hands of the parents whose income is greater by clubbing the income of the minor in his or her own right.When both mother and father are natural guardians, then adding the income of the minor child in the income of the parent, whose income is greater, cannot be said to be arbitrary, artificial or evasive of the object sought to be achieved.

Judgment:

Thus, the Court decided that the Section 6 should be read with Section 64(1A). Accordingly, the assessee case was upheld and court gave his decision in favour of revenue, saying that both father and mother is natural guardian but the income of minor child will get clubbed with the income of guardian having more income.

To Conclude: As per my view, it is well known that the Supreme Court decision was in the favour of revenue, in order to prevent unaccounted money into White money. Otherwise, a tendency has been developed among the tax-payers of the higher tax brackets to divert a part of their income to the hands of their relatives, in order to reduce the tax burden.

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