TaxTMI Login
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →Just a moment...
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether section 16(3)(a)(iii) of the Indian Income-tax Act, 1922 applied to income from assets transferred by a husband to his wife before the sub-section came into force; (ii) whether transfers made on the ground of natural love and affection were transfers for adequate consideration within that provision.
Issue (i): Whether section 16(3)(a)(iii) of the Indian Income-tax Act, 1922 applied to income from assets transferred by a husband to his wife before the sub-section came into force.
Analysis: The amendment introduced by Act IV of 1937 did not invalidate prior transfers or alter their legal validity. It merely prescribed a method for computing the husband's total income by including specified income of the wife. Section 5 of the amending Act limited the non-operation of the amendment only to income chargeable for years ending before 1 April 1937, which showed that the provision was intended to apply to later assessment years even where the transfers had been made earlier. The language of the provision was wide enough to cover income arising after the operative date from assets previously transferred to the wife.
Conclusion: The provision applied to income arising in assessment years subsequent to 1 April 1937, including income from assets transferred before the amendment came into force.
Issue (ii): Whether transfers made on the ground of natural love and affection were transfers for adequate consideration within that provision.
Analysis: The expression "adequate consideration" was treated in its legal sense, not as mere motive or reason. A transfer supported only by natural love and affection was not consideration in law, and in any event it could not be adequate consideration having regard to the statutory purpose. The provision was intended to cover gifts and similar transfers where the wife gave no real and proportionate return. On the facts found, the wife gave no monetary consideration and the transfers were made out of love and affection.
Conclusion: Transfers made only for natural love and affection were not transfers for adequate consideration, and the wife's income was rightly included in the assessee's total income.
Final Conclusion: The reference was answered against the assessee and the inclusion of the wife's income in the husband's assessable income was sustained.
Ratio Decidendi: A taxing amendment that does not invalidate transactions but only changes the mode of computation may apply to income arising after its commencement from transfers made earlier, and a transfer supported merely by natural love and affection is not a transfer for adequate consideration.
TaxTMI 
TaxTMI 
