Clubbing of income: transfers of land that retain joint family/coparcenary character do not attract clubbing under Section 9(2).

Section 9(2) applies only where the transferred asset is the transferor's absolute property; income may be clubbed into a husband's assessment only when the husband has transferred his absolute interest to his wife or minor child. Where lands settled in favour of wife and daughter retained joint family/coparcenary character rather than becoming the assessee's absolute property, those transfers fall outside Section 9(2)'s scope and the income cannot be clubbed with the assessee. The earlier inclusion order was set aside and the matter remitted for merit determination accordingly.

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Issues: Whether the income from lands settled by the assessee in favour of his wife and daughter can be included in the assessee's income under Section 9(2) of the Travancore-Cochin Agricultural Income-tax Act when the settled property is held to be joint family/coparcenary property.

Analysis: Section 9(2) permits inclusion in a husband's income of income from properties transferred by the husband directly or indirectly to his wife and minor child otherwise than for consideration; it therefore applies only where the property transferred is the assessee's absolute property. The court examined authorities on the character of property after partition (including decisions holding that property allotted on partition may retain joint family/ancestral character in the hands of the dividing coparcener). Applying those principles, the court found that the lands settled in favour of the wife and daughter were joint family/coparcenary property rather than the assessee's absolute property; since the transfers were not of the assessee's absolute property, Section 9(2) could not be invoked to club the income with the assessee.

Conclusion: The Commissioner's order directing inclusion of income from the lands in the assessee's assessment under Section 9(2) is set aside and the matter is remitted with a direction that the composition application be dealt with on merits in accordance with law, in favour of the assessee.

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