TMI Blog1961 (1) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... ., M. HIDAYATULLAH., J. C. SHAH JUDGMENT The judgment of the court was delivered by HIDAYATULLAH, J.--This judgment governs the disposal of Civil Appeals Nos. 134 to 137 of 1959. They have been filed by four assessees with special leave and arise out of similar facts, and it is not necessary to refer to more than one case to consider the point in question. The assessment year under consideration is 1952-53, and the previous year, the calendar year 1951. In that year, Mr. Tulsidas Kilachand, one of the four appellants, made a declaration of trust in favour of his wife, a portion of which may be quoted here : " I, Tulsidas Kilachand .... hereby declare that I hold 244 shares of Kesar Corporation Ltd. and 120 shares of Kilac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c) and contended that the case was not governed by section 16(3)(b) and that the dividend income could not be included in his assessment. The Tribunal came to the conclusion that the case was covered either by section 16(3)(a)(iii) or by section 16(3)(b), and that the income from the shares was, therefore, liable to be included in the income of Mr. Tulsidas Kilachand. The Tribunal, however, raised and referred the following question under section 66(1) of the Act to the High Court of Bombay : " Whether on a true construction of the deed of declaration of trust dated 5th March, 1951, the net dividend income of Rs. 30,404 on 120 shares of Kilachand Devchand Co. Ltd. and 244 shares of Kesar Corporation Ltd. held under trust by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be liable to be assessed on the said income as and when the power to revoke arises to him. . . (3) 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 or minor child 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 ; or . . . (b) so much of the income of any person or association of persons as arises from assets transferred otherwise than for adequate consideration to the person or association by such individual for the benefit of his wife or a minor child ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usion or inclusion apply to this case. Section 16(1)(c) provides that income from assets remaining the property of the settlor or disponer or arising to any person by virtue of a revocable transfer of assets shall be deemed to be the income of the transferor. What clause (c) means was decided by this court in Provat Kumar Mitter v. Commissioner of Income-tax. There, Provat Kumar Mitter had assigned the dividends only and had not transferred the relevant shares. It was held by this court that this was a case of application of one's own income and not assignment of the source from which the income was derived, which alone saved the income from tax, subject however, to provisions like section 16(1)(c) and section 16(3). The deed in favour o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... band otherwise than for adequate consideration [vide sub-section (3)(a)(iii)], or (b) so much of the income of any person or association of persons as arises from assets transferred otherwise than for adequate consideration to the person or association by such individual for the benefit of his wife [vide sub-section (3)(b)]. The first question is whether there can be said to be transfer of assets to the wife or to " any person " for the benefit of the wife. The second question is whether there was adequate consideration for the transfer, if there was one. The contention of the assessee is that there was no transfer of any assets at all. It is contended that the ownership of shares involves a bundle of rights, and that they are, generally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of trust, he holds the assets as a trustee. Under the Transfer of Property Act, there can be a transfer by a person to himself or to himself and another person or persons. In our opinion, there was in this case a transfer by Mr. Tulsidas Kilachand to himself as a trustee, though there was no formal transfer. The assessee also stresses the words " any person or association of persons " in section 16(3)(b) and contends that such a person must be other than the husband, who transfers. The word " any person " is wide enough to include the husband, when he transfers property to himself in another capacity. The change of capacity makes him answer the description " any person ". In our opinion, this deed must be regarded as involving a trans ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
