9911796707
TMI Blog1963 (3) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... he property arose indirectly out of the assets transferred indirectly by their husbands so as to attract the provisions of section 16(3)(a)(iii). " In our opinion, these appeals by the Commissioner of Income-tax, Madras, must be allowed. Messrs. Kothari and Sons is a firm of stock brokers. In 1947, the firm consisted of C. M. Kothari and his two sons, D. C. Kothari and H. C. Kothari. Their respective shares were 6 : 5 : 5. On October 7, 1947, the firm entered into an agreement for the purchase of a house in Sterling Road, Madras, for Rs. 90,000, and the same day paid an advance of Rs. 5,000. This sum was debited in the books of the firm to the accounts of the three partners as follows : Rs. C. M. Kothari 1,800 D. C. Kothari 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his was debited to the account of C. M. Kothari and was shown as a gift by him to his daughter in-law. In this way, both the ladies received from the firm Rs. 30,000 which was the exact one-third share of the consideration of Rs. 90,000 but the amount was not paid by their respective husbands, but by the son in the one case, and the father-in-law, in the other. In the assessment years 1948-49, 1950-51 and 1951-52, the Income-tax Officer assessed the income from the one-third share of the house received by Mrs. C. M. Kothari as the income of her husband. Similarly, in the four assessment years, 1948-49 to 1951-52, the income of Mrs. D. C. Kothari from this house was assessed as the income of her husband. This was on the ground that because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ife of such individual as arises directly or indirectly- (iii) from assets transferred directly or indirectly to the wife by the husband otherwise than for adequate consideration or in connection with an agreement to live apart. " The section takes into account not only transference of assets made directly but also made indirectly. It is impossible to state here what sorts are covered by the word " indirectly ", because such transfers may be made in different ways. It is argued that the first requisite of the section is that the assets must be those of the husband and that is not the case here. It is true that the section says that the assets must be those of the husband, but it does not mean that the same assets should reach the wife. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parts of a single transaction. It has not been successfully explained why the father-in-law made such a big gift to his daughter-in-law on the occasion of diwali and why the son made a belated gift, equally big, to his mother on the occasion of her birthday which took place several months before. These two gifts match each other as regards the amount. The High Court overlooked the clear implication of these facts as also the implication of the fact that though the three purchasers were to get one third share each, Mrs. C. M. Kothari paid Rs. 200 more than the other two and that each of the ladies repaid the share of earnest money borne by their respective husbands. An intimate connection between the two transactions, which were prima facie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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