Income attribution to husbands applies where wives' receipts arise indirectly from husbands' assets via circuitous transfers.

Section 16(3)(a)(iii) is applied to attribute to husbands income received by their wives where that income arises directly or indirectly from assets transferred by the husbands without adequate consideration; the statutory scope reaches indirect or circuitous transfers effected by substituting another person's assets to defeat taxation. Where interconnected transfers form parts of a single transaction, and timing, matching of amounts and unexplained connection show a palpable device to evade the provision, intervening transfers need not be technical consideration. On the facts, payments matching purchase shares and coinciding with acquisition establish that the assets yielding the wives' income originated from the husbands, and the income is includible in the husbands' hands.

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Issues: Whether there was material to hold that the income of the wives arose indirectly from assets transferred by their husbands so as to attract section 16(3)(a)(iii) of the Income-tax Act, 1961.

Analysis: Section 16(3)(a)(iii) applies to income of a wife arising directly or indirectly from assets transferred by the husband otherwise than for adequate consideration. The statutory scope includes indirect or circuitous transfers made by substituting assets of another person so as to defeat taxation. Where two or more transfers are inter-connected parts of a single transaction, and the circuitous method is a palpable device to evade the section, the intervening transfers need not constitute technical consideration; connection, matching of amounts and timing, and surrounding circumstances can establish that the assets ultimately yielding the wife's income originated from the husband's assets indirectly. In the present facts, the payments into the wives' accounts matched the one-third purchase shares and coincided with the property purchase; the transfers by the son and father-in-law were so intimately connected and unexplained that they form parts of a single inter-related transaction manifesting an expedient to avoid the section's operation.

Conclusion: Section 16(3)(a)(iii) applies; the income of the wives is to be included in the hands of their husbands. The appeal is allowed in favour of the revenue.

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