| Case ID |
01d10495-0c08-4f9a-adc6-6eb91397eeaf |
| Body |
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| Case Number |
D-2741 of 1955 |
| Decision Date |
Oct 01, 1955 |
| Hearing Date |
Sep 30, 1955 |
| Decision |
The court held that the income assessed to the father, Bhogilal, was incorrectly calculated based on the profits attributed to his minor son, Arvind, who attained majority shortly before his death. The court emphasized that the income must be that which the minor had a legal right to receive, and since Arvind's share was only to be determined at the end of the accounting year, the department's inclusion of the profits in Bhogilal's total income was erroneous. The court ruled in favor of the assessee, indicating that the profits could not be taxed to Bhogilal as they did not belong to him in the year of account, thus setting a precedent on the interpretation of income rights under the Income-tax Act. |
| Summary |
This landmark case from the Bombay High Court clarifies the tax liabilities concerning minors and their parents under the Income-tax Act. The case revolves around Bhogilal Laherchand, who had a partnership with his sons, including Arvind, who was a minor at the time of the partnership's inception. Upon attaining majority, Arvind's rights to the partnership profits were at the center of the dispute. The Income-tax department sought to tax Bhogilal on profits attributed to Arvind based on a technical interpretation of the law. However, the court found that Arvind did not have a right to the profits until they were ascertained at the year's end, thus the income could not be deemed as taxable to Bhogilal. This case highlights the complexities of tax law as it pertains to minors and the necessity for clear rights to income to establish tax liability. Keywords: Income-tax Act, minor income rights, tax liability, Bombay High Court, partnership profits, Arvind's majority, Bhogilal Laherchand. |
| Court |
Bombay High Court
|
| Entities Involved |
Not available
|
| Judges |
Chagla, C.J.,
Tendolkar, J.
|
| Lawyers |
N.A. Palkhivala,
G.N. Joshi
|
| Petitioners |
Bhogilal Laherchand
|
| Respondents |
Commissioner of Income Tax
|
| Citations |
1955 SLD 243,
(1955) 28 ITR 919
|
| Other Citations |
E.D. Sassoon & Co. Ltd. v. CIT [1954] 26 ITR 27 (SC)
|
| Laws Involved |
Income-tax Act, 1961,
Indian Income-tax Act, 1922
|
| Sections |
64,
16(3)
|