Agricultural income transfer rule: voluntary settlement to wives without adequate consideration remained taxable in the husband's hands.

Agricultural income from assets transferred by a husband to his wives was held includible in his total agricultural income because the settlement was a voluntary disposition out of love and affection, not a transfer for adequate consideration under section 9(2)(a)(iii) of the Madras Agricultural Income-tax Act, 1955. The court also held that the third proviso to section 9(1) could not override the specific anti-avoidance rule in section 9(2)(a)(iii), which directly governed income from assets transferred by a husband to his wife otherwise than for adequate consideration. The assessee therefore failed to exclude the income from assessment in his hands.

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Issues: Whether the agricultural income arising from assets transferred by the assessee to his wives was includible in his total agricultural income under section 9(2)(a)(iii) of the Madras Agricultural Income-tax Act, 1955, and whether the third proviso to section 9(1) could exclude such income from assessment in his hands.

Analysis: The transfer deed showed that the assessee had divested himself of the properties in favour of his wives, who were to enjoy only life interests, while the assessee retained management as trustee. The transfer was found to be essentially a voluntary disposition made out of love and affection. A transfer motivated by love and affection does not amount to transfer for adequate consideration within the meaning of section 9(2)(a)(iii). The court further held that the third proviso to section 9(1) could not control or cut down the special provision in section 9(2)(a)(iii), because the latter specifically deals with income from assets transferred by a husband to his wife otherwise than for adequate consideration. The special provision therefore prevailed over the general exemption relied on by the assessee.

Conclusion: The income from the properties settled on the wives was rightly included in the assessee's total agricultural income, and the assessee failed on both grounds.

Final Conclusion: The revision petition was dismissed with costs, and the assessment treating the wives' income as the assessee's income was upheld.

Ratio Decidendi: A voluntary transfer by a husband to his wife out of love and affection is not a transfer for adequate consideration, and a special anti-avoidance provision governing such transfers prevails over a general proviso in the same statute.

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