Ante-nuptial obligation as adequate consideration excludes clubbing under section 64 where property is settled in performance of a genuine promise.

A genuine antecedent matrimonial arrangement can constitute adequate consideration when property is settled in performance of that obligation, rather than as a gratuitous transfer. The article states that contemporaneous letters and uncontroverted mediator affidavits supported the existence of a pre-nuptial agreement under which the assessee undertook to settle property for the children of the second marriage, and that this obligation was natural and probable on the facts. It further explains that adequate consideration must be measurable in money and more than mere love and affection, so a transfer made to discharge the prior promise is supported by adequate consideration and does not attract the clubbing rule in section 64 of the Income-tax Act, 1961.

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Issues: (i) Whether the alleged pre-nuptial agreement was genuine and binding. (ii) Whether the transfer of the property to the trust was made for adequate consideration so as to keep the resulting income outside section 64 of the Income-tax Act, 1961.

Issue (i): Whether the alleged pre-nuptial agreement was genuine and binding.

Analysis: The evidence, including the contemporaneous letters and the uncontroverted affidavits of the mediators, supported the existence of a prior matrimonial arrangement under which the assessee undertook to settle the property for the benefit of the children of the second marriage. The surrounding circumstances made the arrangement natural and probable, and the finding of genuineness recorded by the Tribunal was justified.

Conclusion: The pre-nuptial agreement was held to be genuine and binding.

Issue (ii): Whether the transfer of the property to the trust was made for adequate consideration so as to keep the resulting income outside section 64 of the Income-tax Act, 1961.

Analysis: Adequate consideration must be something measurable in money and more than mere love and affection. Here, the transfer was made in performance of an antecedent promise undertaken before the marriage, and the assessee carried out that obligation by creating the trust. The transfer was therefore not a gratuitous one but a transfer supported by adequate consideration within the meaning of the applicable provision.

Conclusion: The transfer was held to have been made for adequate consideration and section 64 did not apply.

Final Conclusion: The question referred was answered in favour of the assessee, and the income from the property was not includible in the assessee's total income.

Ratio Decidendi: A transfer made in performance of a genuine antecedent matrimonial obligation is supported by adequate consideration, and income arising from such a transfer is not attracted by the clubbing provision that applies only to transfers otherwise than for adequate consideration.

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