TMI Blog1964 (11) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 - - - Dated:- 9-11-1964 - J.C. Shah, K. Subba Rao and S.M. Sikri JUDGMENT S.M. Sikri 1. This is an appeal on certificate granted by the Gujarat High Court under section 66A(2) of the Indian Income Tax Act, 1922, hereinafter referred to as the Act, and involves the interpretation of section 16(3)(a)(iii) and section 16(3)(a)(iv) of the Act. The facts are not in dispute and it is not necessary to record the findings of the Income-tax Officer and the Assistant Appellate Commissioner. It is sufficient to extract the relevant facts from the order of the Appellate Tribunal. 2. The respondent, Keshavlal Lallubhai Patel, hereinafter referred to as the assessee, was assessed till the assessment year 1952-53 (Accounting year endi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 16(3) of the Act. The Appellate Tribunal, at the instance of the assessee, referred the following question to the High Court: Whether on the facts and circumstances of this case the throwing into the hotchpotch of the applicant's self-acquired property and the subsequent partition among the members of the Hindu undivided family is an indirect transfer of property so far as the wife and minor son are concerned, within the meaning of section 16(3)(a)(iii) and (iv) of the Income Tax Act? 4. The High Court answered the above question in favour of the assessee. As stated above, it granted a certificate under section 66A(2) of the Act. 5. Mr. Rajagopala Sastri, the learned counsel for the Revenue, urges before us that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be construed strictly. He says that neither the act of throwing the self-acquired property into the hotchpotch, nor the partition of joint family property was a transfer within the meaning of section 16(3)(a)(iii) or section 16(3)(a)(iv). If the legislature wanted to rope in these acts, it could have used another word, such as 'arrangement'. 7. Apart from authority, looking at the language of section 16(3)(a)(iii), following two conditions must be satisfied before the said provision can be applied: (1) Assets must be transferred by the husband to the wife; (2) The assets must be transferred directly or indirectly. 8. Two questions arise: Is the word 'transfer' used in the technical sense or in the pop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes not destroy the significance of the word 'transfer'. 11. Mr. Rajagopala Sastri relies strongly on the decision of this court in Commissioner of Income-tax v. C. M. Kothari [1963]49ITR107(SC). But in our opinion that case is clearly distinguishable and does not assist us in this case. In that case, C. M. Kothari and his sons were both desirous of putting ₹ 30,000 in the hands of their wives to enable them to buy a share in a house. Instead of directly gifting the amount, they hit upon the following device: C. M. Kothari would gift ₹ 30,000 to the daughter-in-law and the son would gift ₹ 30,000 to the mother. This Court held that it was a palpable device and a trick and the two cross transactions amounted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tnayya v. Gutta Sarasamma . I.L.R. [1951] Mad. 607. Subba Rao, J., then a Judge of the Madras High Court, after examining several authorities, came to the conclusion that partition is really a process in and by which a joint enjoyment is transformed into an enjoyment in severalty. Each one of the sharers had an antecedent title and therefore no conveyance is involved in the process as a conferment of a new title is not necessary. The Madras High Court again examined the question in M. K. Stremann v. Commissioner of Income-tax, Madras [1961]41ITR297(Mad) with reference to section 16(3)(a)(iv). It is observed that obviously no question of transfer of assets can arise when all that happens is separation in status, though the result of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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