TMI Blog1993 (7) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... tion cannot be said to have been received by the assessee's wife on indirect transfer from her husband and, consequently, the income arising from transfer of portions of the assets in question cannot be included in the computation of the assessee's income ? (2) Whether the transfer of one-third share of the land at Paldi made in favour of the assessee's wife could be said to be an indirect transfer made by her husband himself ? (3) Whether one-third share of the land at Paldi received by the assessee's wife, Hafsabanu, as gift from the assessee's brother, Abdullabhai, was an asset indirectly transferred to her by her husband assessee ? (4) Whether the Tribunal was right in law in holding that the assessee's brother, Abdullabhai, and A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing out of the sale of the land by his wife in the total income of the assessee. The appeal filed to the Appellate Assistant Commissioner failed. Therefore, the assessee preferred an appeal to the Tribunal. The Tribunal dismissed the appeal. Subsequently, a miscellaneous application was filed before the Tribunal and it was brought to the notice of the Tribunal that it had proceeded on a wrong basis that the two sons of the assessee's brother were minors on the date of the gift. In fact, they were major. The Tribunal corrected the mistake and reversed its earlier finding as regards includibility of the income in question in the total income of the assessee. Thereafter the Department moved a miscellaneous application stating that while grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of section 64(1)(iii) of the Act. The contention which was raised before the Tribunal was that, unless both the transferors had the same motive of getting out of the provisions of section 64(1)(iii), the transfers made by them cannot be covered by the provisions of section 64(1)(iii) of the Act. The Tribunal appears to have accepted this contention as can be seen from the following observations made by it in paragraph 9 of its order : "As against this, it has to be noticed that the assessee's brother, Abdullabhai and Abdullabhai's two sons being different legal persons all competent to contract or sui juris, the gift which went to the benefit of his two sons could not be said to benefit Abdullabhai so as to give rise to a motive on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sumed that, before the transfer can be said to be interconnected so as to form the same transaction, it was necessary to establish that both the transferors stood to gain as a result of the said transaction. In our opinion, the Tribunal committed an error of law by applying a wrong test for the purpose of deciding whether the assessee can be said to have made an indirect transfer in favour of his wife. What section 64(1)(iii) provides is that, in computing the total income of any individual, there shall be included all such income as arises directly or indirectly subject to the provisions of clause (i) of section 27, to the spouse of such individual from assets transferred directly or indirectly to the spouse of such individual otherwise th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the same transaction and were effected in such a way that they can be said to have been adopted as a device to evade the implications of section 64(1)(iii). The Tribunal has proceeded on the basis that, in this case, there was no intimate connection between the two transfers. It was, therefore, submitted by learned counsel for the assessee that this being a finding of fact, it is required to be accepted by this court and, in a reference made under section 256(1) of the Act, no different view can be taken by this court. As pointed out by us, this finding has been recorded by the Tribunal after applying a wrong test. Therefore, it cannot be regarded as a pure finding of fact. Moreover, a question challenging this finding is referred b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsfers which were made on the same day were interconnected or not. It is obvious that if the assessee had transferred his one-third share in the land to his wife directly, then the income in the hands of the wife in respect of that property would have been treated as income of the assessee himself. In order to get out of this legal liability, the assessee transferred the land to his brother's sons and the said brother, in his turn, transferred his one-third share in the same land to the wife of the assessee. The said two transfers were not only interconnected but they were parts of the same transaction. The assessee can certainly be said to have adopted this device with a view to escape from the provisions of section 64(1)(iii) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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