TMI Blog1958 (3) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... t facts have been taken from the statement of the case submitted by the Tribunal. C.M. Kothari and his sons D.C. Kothari and H.C. Kothari were partners, who constituted the firm Kothari and Sons. C.M. Kothari had a six annas share, while each of the sons had a five annas share. The firm entered into an agreement to purchase a house at Madras, and on 7th October, 1947, it paid the vendor an advance of ₹ 5,000 from out of the funds of the partnership. This amount was debited to the personal accounts of the three partners. The father was debited with ₹ 1,800, while each of the sons was debited with ₹ 1,600. The sale, however, on 24th October, 1957, was in favour of Mrs. G.M. Kothari, Mrs. D.G. Kothari and H.G. Kothari. Each of the three contributed ₹ 28,333-5-4 to make up the consideration for the sale, ₹ 90,000 plus expenses less ₹ 5,000 already paid as advance to the vendor. 4. To enable the ladies to pay their shares of the purchase price C.M. Kothari paid ₹ 30,000 to his daughter-in-law, Mrs. D.G. Kothari, by a cheque, dated 13th November, 1947. This amount was paid out of the partnership funds and was duly debited to the personal accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l for the purpose of assessment, there shall be included- (a) so much of the income of a wife... 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. ₹ 30,000 constituted the assets transferred to Mrs. C.M. Kothari, but the transfer was not by her husband nor was it from out of his assets. Similarly the transfer of Mrs. D.C. Kothari was not by her husband but by her father-in-law and from out of his assets. Section 16(3)(a)(iii) however covers both direct and indirect transfers; but the transfer must be by the husband of a portion of his assets. to his wife. 8. The Tribunal found: ...we have no hesitation in holding that the share in the property presently acquired by Mrs. C.M. Kothari and Mrs. Indira D.C. Kothari represent clearly assets transferred at least indirectly to them by their respective husbands and without adequate consideration, thus bringing the rental income therefrom within the mischief of Section 16(3)(a)(iii). 9. Whether there was no material on record to sustain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property is obviously a factor different from the provision of funds to effect the purchase. Even, if, despite, the absence of any evidence other than that aforesaid by the payments to G.M. Kothari and D.G. Kothari, it is permissible to infer from these payments themselves that G.M. Kothari assigned his right to buy to his wife, and D.G. Kothari assigned his right to buy to his wife, that did not constitute any transfer of assets. Did each of the assessees transfer indirectly his assets to the extent of ₹ 30,000 to his wife is still the question for consideration. 14. So all that remains to support the conclusion of the Tribunal, that there was an indirect transfer, is what it recorded in paragraph 11 of the statement of the case: The gifts of equal amounts were made cross-wise by the father-in-law to his daughter-in-law and by the son to his mother. 15. The evidence of cross-gifts with nothing more - there is nothing more in the evidence on record - may not lead to an inference of an indirect transfer of assets by each of the assessess to his wife. There is no dispute about the correctness of the finding of fact, that they were cross-transfers. Nor is there any disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment which must be looked at as a whole, with the result that they really, for this purpose constitute one disposition. 19. The relevant statutory provisions which Finlay, J., had to apply ran: Any income... which by virtue or in consequence of any disposition made, directly or indirectly, by any person... is payable to or applicable for the benefit of a child of that person . shall subject to the provisions of this Section... be deemed for the purposes of the enactments relating to income-tax (including super-tax) to be the income of the person who is or was able to obtain the beneficial enjoyment thereof, or of the person, if living, by whom the disposition was made.... 20. That is certainly not identical with the statutory provision in Section 16(3)(a)(iii) of the Income-tax Act, which it should be remembered, says: In computing the total income of any individual for the purpose of assessment, there shall be included- (a) so much of the income of a wife...of such individual as arises directly or in directly- (iii) from assets transferred directly or indirectly to the wife by the husband 21. In commenting on the scope of the statutory provision in Section 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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