Taxability of minor who is becoming major

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Nihal Joshi (Querist)
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08 January 2016 Dear Sir,

I am having one doubt regarding the taxability of minor who is becoming major.

Mr. X who has become major in July 2015.

My doubt is while filing the return of Mr. X, what should be the treatment of the income earned during A.Y. 2016 - 17.

Whether From April to July should be clubbed in parent and From August to March should be filed by Mr. X?
or
Income earned From April 2015 to March 2016 should be filed by Mr. X?

Your cooperation in this work will be highly appreciated.

Thanks and regards,
Nihal Joshi.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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08 January 2016 Return will be filed of Mr X from 1.4.2015 to 31.03.2016. Income will not be clubbed in the parents for AY 2016-17.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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08 January 2016 If the minor child becomes major during the year, then the income
which have accrued till the date the minor attains majority shall be clubbed u/s 64(1A).

The reason is :-
* the phraseology is 'income arises or accrues' .
* except business income, all other incomes accrues day wise.

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CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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08 January 2016 In my view, the phraseology of "income arises or accrues " day wise holds good for every kind of income including business income. As every income has "own day" of its accrual.
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We have concept of previous year. Income accrues or arises during the previous year is taxable. Section 64(1A) speaks about the treatment of minor child's income at the time of computation of total income of the parent. At that time whether he can be said as a minor ?
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Further " at any time during the previous year" or till the child attains majority" like phrases are absent in the statute with the phraseology of "income arises or accrues to his minor child" . Which shows the intention of the legislature to club the child' income during the continuance of the minority and not thereafter.
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There may be problem in claiming the deductions also. Suppose from the minor's account, LIC premium has been paid before he attains the majority. On the basis of above argument the deduction would have been denied to the Child (Major).
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In my view, " income accrues or arises to a minor child" has to be clubbed only when he retains his minor "status" throughout during the previous year. In the absence of any other supportive phrase, we have to see the provisions on the basis of generality.
.

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