THE COMMISSIONER OF INCOME-TAX, MADRAS versus S. A. S. MARIMUTHU NADAR

Citation: [1962] 3 S.C.R. 102 · Decided: 10-08-1961 · Supreme Court of India · Bench: P.B. GAJENDRAGADKAR · Disposal: Dismissed

Judgment (excerpt)

Jgf] 
-'"9'1" 10, 
102 
SUPREME COURT REPORTS 
(1962) 
THE COMMISSIONER OF INCOME-TAX, 
MADRAS 
v. 
S. A. S. !IIARUIUTHU NADAR 
(P. B. 
GAJENDRAOADKAR, 
K. 
SuBBA RAo and 
M. HIDAYATULLAII, J.J.) 
Inwme Tax-Earned income relief-If r,an be granttd on 
minor son'• •hare of profits included in father's itWJme-Inrome· 
tax Act, 1922 (11of1922), SR. 2(6AA), 16(3) (a)(ii). 
The respondent formed a partnership firm with his two 
major sons, and his two minor sons were admitted to the 
benefits of the partnership to the extent of their shares. In 
the relevant assessment years 1 he income of the minors was 
'( 
added to the Iota] income of the respondent under s. 16(3)(a) 
(ii) of the Inoome-tax Act and he was granted "earned income 
relief" only to the extent of his own individual share of the 
profits. 
He claimed earned income 1elief under s. 2(6AA) of 
the Income-tax Act on the share of the profits of the minor 
sons which was included in his total income. 
llelrl, that the general in1ention of s. 2 (6AA) of the 
1 ncomc-tax Act is to give relief in cases where the income of a 
minor is included in the to1al income of the father who has to 
\. 
pay income tax on the consolidated amount of profits and the 
section means that in the case of a firm the father being the 
partner who is actively wgaged in the conduct of the businesa 
of the firm while the minor is not, earned income relief should 
be gh·en to the father to the extent of lho minors' share of the 
profits also, 
CJ.vn, 
APPEJ.I.ATE 
JumsorCTION : 
Civil 
Appeals Nos. 427 and 428 of 1960. 
~ 
Appeals from the judgment and order dated 
AuguHt 28, 1956, of the Madras High Court in case 
Referred No. 28 of 1953. ·· 
ll. N. Sanyal Additional Solicitol' General of 
India, K. N. Rajagopal Sastri, T. 111. Sen and 
P. D. Menon, for the appellants. 
L. 
Narayanasu:ami and R. Gopalakrishru:m, for 
the respondents, 
-
3~S.C.R. 
SUPREME COURT REPORTS 
103 
1961. August 10. The Judgment of the Court 
was. delivered by 
HIDAYATULLAH, J.-These are two appeals 
agail'lst the judgment of the 'Madras High Court 
dated August 28, 1956, by which a composite 
question embracing two assessment years, referred 
by the Income-tax Appellate Tribunal (Madras 
Bench, 'B' ) was answered against the Department. 
The question, which was referred to the High 
Court, was as follows : 
"Whether the assessee is entitled to 
earned income relief on the share income of 
the two minor sons for 1949-50 assessment 
year and on the share income of one minor 
son for 1950-51 assessment year included in 
the computation of the tot'J.l income of 
assesseo under the provisions of section 
16(3)(a)(ii) of the Inoome-ta.x Act?" 
The respondent, S.A.S. Marimuthu Nadar, was 
the manager of a Hindu undivided family. 
The 
family consisted of Marimuthu Nadar, his two major 
) 
sons and two minor sons. On August 16, 1946, the 
family divided, and a firm came into existence. 
Marimuthu Nadar and his two major sons took 
4/l6th share each and the two minor sons were 
admitted to the benefits of partnership to the 
extent of 2/16th share each. For the :issessment 
year, 1949-50 (the previous year ended on, August 
" 
16, 1948 ) the share of profits of Marimuthu Nadar 
from the partnership was Rs. 9,812, whilt> the share 
of profits of his two minor sons was Rs. 8,124 and 
Rs. 8,381. The income of the minors was added to 
the total income of Marimuthu Nadar under 
s.l6(3)(a)(ii) of the Income-tax Act. Marimuthu 
Nadar w!ts granted earned income relief only to 
the extent of his own individual share of the profits 
J. from the partnership. In the assessment year, 
1950-51, the elder of the two minor sons had 
l;?ec9~e major, and i~ was only the spare of tH\I 
1961 
The Oommi1aiontr 
of Inrome-ta>, 
Madras 
v. 
S.A.S. 
Marimuthu Nadar 
Hidayatullah J. 
1961 
TM Comm~ioner 
of 11loome-tax. 
!ladras 
v. 
S.A.S. 
Marimuthu Nadur 
HidaJ<1l11llah J. 
104 
SUPI!.EME OOURT REPORTS 
[1962l 
remaining minor son which was included in the 
total income of llforimuthu Nadar. In tha.t year 
also, he was given earned income relief only on 
his share of the profits but not on the share of tho 
profits of the minor son, which was included in his 
total income. Marimuthu Nadar's share of profits 
was Rs. 12,:H4 and that of his 
minor son, 
Rs. 10,143. 
Marimuthn Nadar appealed to the Appellate 
Assistant Commissioner and also to the Appellate 
Tribunal ; but his appeals were unsuccessful. At 
the instance of :\farimuthu Na<lar, the Tr

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