Report No. 265

Prospects of Exempting Income arising out of Maintenance Money of 'Minor'

Forwarded to the Union Minister of Law and Justice, Ministry of Law and Justice, Government of India by Dr. Justice B.S. Chauhan Law Commission of India, on 20 March 2017

1. Reference to the Commission

The Punjab and Haryana High Court, while dealing with the case Payal Mehta v. Sanjay Sarin, 2016 SCC Online P&H 4989, vide its judgment and order dated 27.01.2016 referred the matter to the Law Commission of India for consideration as to whether the provisions of section 64( lA) of the Income Tax Act, 1961 (hereinafter called the Act, 1961) require an amendment to provide for exemption from clubbing of minor's income accruing by way of interest on the amount deposited by one of the parents of the minor child as maintenance, at the hands of the other parent/ guardian under an order of the Court.

The plea taken in this case is that the interest on the amount of maintenance deposited in the name of minor child should not be subjected to tax, i.e., such income be not clubbed with the income of either of the parent for the purpose of imposing the tax.