(1)   For the purpose of charge of tax, the total income of an assessee    shall be computed in the manner provided in this Ordinance 

(2)  In computing the total income of an assessee, there shall be included any exemption or allowance specified in part B of the Sixth Schedule and any income deemed to be the income of the assessee under section 19, subject to the limits, conditions and qualifications laid down therein.

(3)  Where the assessee is a partner of a firm, then, whether the firm has made a profit or a loss, his share (whether a net profit or a net loss) shall be taken to be any salary, interest, commission or other remuneration payable to him by the firm in respect of the income year increased or decreased respectively by his share in the balance of the profit or loss of the firm after the deduction of any interest, salary, commission or other remuneration payable to any partner in respect of the income year ¹[and also in the case of a registered firm, of the tax payable by it;] and such share shall be included in his total income:

Provided that if his share so computed is a loss, such loss may be set off or carried forward and set off in accordance with the provisions of section 42.

  (4)  In computing the total income of any individual for the purpose of   assessment, there shall be included –

(a)   so much of the income of the spouse or minor child of such individual as arises, directly or indirectly, -

(i) from the membership of the spouse in a firm of which such individual is a partner;

(ii) from the admission of the minor child to the benefits of partnership in a firm of which such individual is a partner;

(iii) from assets transferred directly or indirectly to the spouse otherwise than ²[by way of gift or] for adequate consideration,for adequate  consideration,  to  such  person  or  association  of  persons  by such individual for the benefit of the spouse or minor child or both. 

(iv) from assets transferred directly or indirectly to the minor child, not being a married daughter, by such individual otherwise than ³[by way of gift or] for adequate consideration; and

(b) so much of the income of any person or association of persons as arises from assets transferred, otherwise than ⁴[by way of gift or] for adequate consideration, to such person or association of persons by such individual for the benefit of the spouse or minor child or both.

(5) All income arising to any person by virtue of a settlement or disposition whether revocable or not from assets remaining the property of the ⁵[settlor] or disponer, shall be deemed to be income of the ⁶[settler] or disponer, and all income arising to any person by virtue of a revocable transfer of assets shall be deemed to be income of the transferor and shall be included in the total income of such person.

 (6)    For the purpose of sub-section (5),--

(a)   a settlement, disposition or transfer shall be deemed to be revocable if it contains any provision for the retransfer directly or indirectly of the income or assets to the ²[settlor], disponer or transferor, or in any way gives the settlor, disponer or transferor a right to resume power directly over the income or assets;

(b)  the expression "settlement or disposition" shall include any disposition, trust, covenant, agreement or arrangement, and the expression ²[settlor] or disponer, in relation to a settlement or disposition, shall include any person by whom the settlement or disposition was made.

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¹ Omitted by F.A. 1995  

² Omitted the words "by way of gift or" by F.O. 1985, subsequently re-ins by F.A. 1990

³ Omitted the words "by way of gift or" by F.O. 1985, subsequently re-ins by F.A. 1990

⁴ Omitted the words "by way of gift or" by F.O. 1985, subsequently re-ins by F.A. 1990
⁵ Subs. for "settler" by F.A. 1989 and shall be deemed to have been always so substituted. 

⁶ Subs. for "settler" by F.A. 1989 and shall be deemed to have been always so substituted.