COMMISSIONER OF INCOME-TAX, WEST BENGAL,CALCUTTA vs SHRI PREM BHAI PAREKH AND ORS.

The Supreme Court held that under Section 16(3)(a)(iv) of the Indian Income-tax Act, 1922, income arising to minor children from their admission to partnership benefits must have a proximate nexus to a transfer of assets by the assessee. The Court found that the income of the minors did not arise directly from the transfer of gifts made by their father, thus ruling in favor of the assessee. The High Court's decision was reversed, confirming that the income was improperly included in the total income of the assessee.