TMI Blog1974 (11) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... are three brothers. Their respective wives are B. Sarojini, V. Amirtham Ammal and R. Sarojini. On March 31, 1963, each of the three ladies mentioned above transferred certain shares held by each of them in Messrs. Rayalaseema Passenger and Goods Transports (Private) Ltd., as follows : -------------------------------------------------------------------------------------------------------------------------------------------------- Transferor Transferee Date of No. of shares Sale price Market transfer transferred (face value value of the shares) -------------------------------------------------------------------------------------------------------------------------------------------------- Rs. Rs. Smt. B. R. Sumanth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The first contention taken on behalf of the assessee before us was that the shares having been transferred at their face value, there was no transfer otherwise than for adequate consideration on the facts here. This contention has absolutely no force, as it is evident from the records that on the basis that the shares transferred were of the market value of Rs. 44,000, the assessee herself filed a gift-tax return with reference to the extent of the difference between Rs. 44,000 and Rs. 11,000 and was assessed thereon. It is also evident from the records that by applying section 52 of the Income-tax Act, the capital gains tax was levied on the footing that the full value for the consideration of the transfer was Rs. 44,000 and not Rs. 11,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n L. G. Balakrishnan v. Commissioner of Income-tax. In that case, L.G. Balakrishnan, one of the brothers of the family of the assessee, was assessed on a transfer of Rs. 50,000 made by him in favour of his niece in February, 1958. At or about the same date there was also a transfer of Rs.50,000 in favour of his son. The income earned by the said sum of Rs. 50,000 transferred by Balakrishnan was assessed under section 16(3)(a)(iv) of the Act of 1922 which corresponds to section 64(iv) of the present Act. When the matter came on reference to this court, it was held: " 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 certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat ground No. 8 specifically took this point. There is nothing to show in the order of the Tribunal that this point was abandoned. This would, therefore, be a point, which though not decided by the Tribunal ex facie can be taken to have been decided against the assessee by it. We would, therefore, proceed to consider this part of the question. On this point there is a direct decision of the Bombay High Court in H. N. Patwardhan v. Commissioner of Income-tax. In that case the assessee sold immovable property to his wife on August 31, 1956, for a sum of Rs. 1,00,000. In connection with the return for wealth-tax, the assessee's consulting engineer valued the property at Rs. 1,50,000. The Income-tax Officer included the income from the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its language and that the learned judges of the Bombay High Court had not properly construed the relevant provision. We are unable to agree with him. Section 16(3) of the Act of 1922 was couched in substantially the same language. In construing the said provision, the Supreme Court observed in Commissioner of Income-tax v. Manilal Dhanji, at page 881, as follows: " Then we come to sub-section (3). This sub-section aims at foiling an individual's attempt to avoid or reduce the incidence of tax by transferring his assets to his wife or minor child or admitting his wife as a partner or admitting his minor child to the benefits of a partnership in a firm in which such an individual is a partner. The sub-section creates an artificial liabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : "The existing sections 16(3)(a) and 16(3)(b) both begin with the words 'so much of the income'. This is provided in the draft clause opening remarks by the words 'all such income' and repetition in the item corresponding to section 16(3)(b) has been avoided." It is, therefore, clear that the object was not to make any alteration in the sense as such. The Supreme Court had occasion to construe a similar expression in section 16(1)(c) in Hrishikesh Ganguly v. Commissioner of Income-tax . In that case an assessee transferred two of the houses belonging to him to a trust providing that the trustees shall pay a sum of Rs. 200 per month to him for life for his own absolute use and benefit out of the income from the trust properties. The t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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