TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Dividend not includible in spouse's income pre-marriage: Supreme Court decision</h1> <h3>Philip John Plasket Thomas Versus Commissioner of Income-tax </h3> Philip John Plasket Thomas Versus Commissioner of Income-tax - [1963] 49 ITR (SC) 97, 1964 AIR 587, 1964 SCR (2) 480 Issues Involved:1. Applicability of Section 16(3)(a)(iii) of the Indian Income-tax Act, 1922.2. Applicability of Section 16(1)(c) of the Indian Income-tax Act, 1922.3. Timing and effect of the transfer of shares.4. Adequate consideration for the transfer.Issue-wise Detailed Analysis:1. Applicability of Section 16(3)(a)(iii) of the Indian Income-tax Act, 1922:The main issue was whether the dividends paid to Mrs. Judith Thomas could be included in the income of Mr. P.J.P. Thomas under Section 16(3)(a)(iii). The Tribunal and the High Court had differing views on this. The High Court held that the relationship of husband and wife must be considered at the time of computing the total income, not at the time of the transfer. The Supreme Court disagreed, stating that the relationship of husband and wife must subsist both at the time of the transfer and when the income accrues. The Supreme Court concluded that since the transfer occurred before the marriage, Section 16(3)(a)(iii) was not applicable.2. Applicability of Section 16(1)(c) of the Indian Income-tax Act, 1922:The High Court had ruled in favor of the assessee on this issue, and since the Department did not appeal this decision, the Supreme Court did not consider the correctness of this ruling. Therefore, the dividends could not be included in the total income of Mr. P.J.P. Thomas under Section 16(1)(c).3. Timing and Effect of the Transfer of Shares:The transfer deed dated December 10, 1947, stated that the transfer was in consideration of the forthcoming marriage. The Supreme Court held that the transfer took effect immediately on December 10, 1947, and was not postponed to the date of marriage. Therefore, at the time of the transfer, Mrs. Judith Knight was not the wife of the assessee, and hence, the provisions of Section 16(3)(a)(iii) were not attracted.4. Adequate Consideration for the Transfer:Although the High Court considered the issue of adequate consideration, the Supreme Court found it unnecessary to decide on this point due to their interpretation of the first two issues. The Court held that the transfer was not made by the husband to his wife, thus Section 16(3)(a)(iii) was not applicable irrespective of whether there was adequate consideration.Conclusion:The Supreme Court allowed the appeals, ruling in favor of the assessee. The dividends paid to Mrs. Judith Thomas could not be included in the income of Mr. P.J.P. Thomas under Section 16(3)(a)(iii) of the Indian Income-tax Act, 1922. The appellant was entitled to costs in both the Supreme Court and the High Court.
TaxTMI 