Analysis, Income Tax

A Puzzle for Income Tax Experts

As an income tax professional, you would be natural at solving puzzles. You have to deal with them every now and again in your practice. So here’s one which should make you interested.

The Question

In 1975 if a parent’s minor child was credited with income derived out of a partnership, is the parent liable to pay tax ?

Clue: This question relates to Section 64 of the income tax act

The Answer

If you arrived at the answer or guessed it based on your many years of experience, we doff our hat to you.

If you clicked on the section link above and found the answer quickly, then you used the most sophisticated tax technology out there.

The section changed in 1976-77 to include income of minors from partnership firms generally and not just where the parent had interests. Prior to that the law was not clear.

This was not a hypothetical puzzle, it relates to the Shree Loknath Goenka vs CIT, a full bench Patna High Court case decided in 2019, when the minors may not be very far from retirement age.

Is your legacy income tax search solution telling you all?

Here are a few things that we think you may want to know from research tool as far as the legislation information goes:

  • History behind introduction of the Section
  • The text of the Act as it stood in a particular yeare
  • Cases relating to the Section

If you had a case, similar to the one in the puzzle, how would you procure the Act of the relevant AY? High Court Library? Your own library?  These are all good options. But for many young lawyers, access to historical law books is not easy. The Income Tax Department’s website may come handy here: however, the income tax department’s website stops at just providing access to the legislative material.

As a counsel seeking to argue a similar matter you would need more than that.

  • Access to all relevant memoranda to the Finance Bills
  • Delegated legislations like CBDT notifications, circulars and case laws connected with this Section.

Legacy tax websites and even Google can lead you to the water. But Riverus employs more of a packaged drinking water to your table approach. More delightful and less painful.

Income Tax Law @ Riverus

Legislative Intent

Very often tax practitioners are required to support a tax position with a specific interpretation  of a Section.  How can tax practitioners know, various interpretations / intent of a Section that tax tribunals or courts have adopted.

Take for instance the case of K. Krishnaveni vs Appellate Assistant Commissioner (Madras High Court, 1984) where the assessee was challenging the vires of Section 64(iii)  on the ground that just because minors receive partnership income, such income should not be automatically assessed in the hands of the father of the minor.

The legacy websites will drive you to do a full case law research. However, Riverus treats this very differently.  It is possible to obtain a 10 minute quick overview of any Section just by reading how other tax professionals and judges have interpreted the legislative intent behind the Section.

The way tax counsels refer to the intent behind a Section, the way judges distinguish or agree with such interpretation, are all very useful material while advising on any given issue or Section. Riverus’ award winning software offers an unique and easy way to access such knowledge.

Section Analytics.

This is nothing but collation of all judgements where a particular Section has been mentioned. We had earlier done a story to show how section analytics is more beneficial over section searches that you can perform on legacy tax websites.

Now the best part is that all the above premium features are currently part of Research Map- Riverus’ AI driven web based tax solution. Riverus is currently providing a 1 year free license of Research Map to support the community of tax professionals during this unprecedented Covid crisis.

So change your legacy tax website today and choose Riverus Research Map.

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