Tax Management India. Com
                        Law and Practice: A Digital eBook ...

Category of Documents

TMI - Tax Management India. Com
Case Laws Acts Notifications Circulars Classification Forms Manuals SMS News Articles
Highlights
D. Forum
What's New

Share:      

        Home        
 

TMI Blog

Home List
← Previous Next →

1962 (10) TMI 86

..... assessment there shall be included - (a) so much of the income of a wife or minor child of such individual as arises directly or indirectly - (iv) from assets transferred directly or indirectly to the minor child, not being a married daughter, by such individual otherwise than for adequate consideration." In this reference we are concerned with the applicability of the above provision to the fact and circumstances of the case. The assessee is one L. G. Balakrishnan, who had declared his status as a Hindu undivided family with one minor son. The accounting year is the year ended 31st March, 1958, and the assessment year is 1958-59. In computing the assessable income the Additional Income-tax Officer, Coimbatore, included a sum of ₹ .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... of ₹ 50,000. The tenor of the entries was to make it appear that there was no direct gift or transfer of assets by any of the three brothers in favour of their respective minor children. The Income-tax Officer was of the opinion that though there was no direct transfer of assets by the father to his minor child, there was an indirect transfer within the meaning of the said expression in section 16(3)(a)(iv). He, therefore, subjected the income of ₹ 933 to tax in the hands of Balakrishnan. This sum of ₹ 933 admittedly arose by way of income from the sum of ₹ 50,000, credited in the firms accounts in the name of Vijayakumar, the minor son of Balakrishnan. The assessee preferred an appeal to the Appellate Assistant Comm .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... n from an asset indirectly transferred to him so as to attract the provisions of the aforesaid sub-sections." On an application by the assessee for reference to this court, under section 66(1) of the Act, the following question has been referred : "Whether the assessment of the income derived by the assessees son Vijayakumar, from the said sum of ₹ 50,000 transferred to him by way of gift by his uncle L. G. Ramamurrthi in the hands of the assessee invoking the provisions of section 16(3)(a)(iv) is lega ?" We have already set out the relevant statutory provisions. The object of section 16(3)(a)(iv) is plain. The assessee would like to lessen the burden of taxation by transferring his assets to his minor children so that .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... the income arising therefrom indicate the anxiety of the legislature to safeguard against tax avoidance by mere devices and forms of transaction which in their apparent tenor, may not attract tax. Substantially the provision lays down that a transfer of assets by the assessee resulting in an income to his minor child, not being a married daughter, and not being a transfer for consideration, would not be recognised for income-tax purposes and the income would be treated as the income of the assessee. Learned counsel for the assessee contends that the case is not covered by the section as the assessee did not transfer any assets to this minor son and that assuming his brother made a gift to his son because the assessee had made a gift to the .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... 1,600 which was credited to the personal account of D. The Tribunal found that the purchase was not benami but held that the rent income arising from the property to Mrs. K and Mrs. D arose to them from assets indirectly transferred by their husbands and should be included in the assessment of K and D under section 16(3)(c)(iii) of the company of the Income-tax Act. This court held that the fact that there were cross-gifts either by itself or taken with the fact that the gifts were simultaneous in point of time did not establish that each transfer constituted the consideration of the other, and that the transfers were mutual. It was further held that there was no material on record to justify the conclusion that the transfer of assets effe .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... , and there was no evidence either on which such a finding could be rested." If the cross-transactions are independent of each other the section cannot have any application. If they are of the same transaction, even then, they would fall outside the section if they are real. But if they are no more than mere appearances assiduously maintained, the department can lift the veil and declare the true nature of the transaction as being one within the section. The finding of the department as well as of the Tribunal is that there was an indirect transfer of assets by L. G. Balakrishnan to his minor son, Vijayakumar. This is certainly based on the evidence on record and it seems to us that this finding is fully justified and warranted. As sta .....

X X X X X X X

Full Text of the Document

X X X X X X X

 

 

← Previous Next →

 

 

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || Database || Members || Refer Us ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.
|| Blog || Site Map - Recent || Site Map ||