Income from assets transferred for consent to adoption was held includible in the transferor's hands under tax law.

Income arising from assets transferred by an assessee to his wife in connection with her consent to adoption was held includible in the assessee's hands under section 64(iii) of the Income-tax Act, 1961. The Court reasoned that a payment or reward for consent to adoption falls within the prohibition in section 17 of the Hindu Adoptions and Maintenance Act, 1956, because the ban on giving or receiving consideration for adoption applies to all persons, including the adoptive mother. In the alternative, if the transfer was treated as provision for the wife's future security or maintenance, it was not a transfer for adequate consideration and therefore did not satisfy the statutory exception. The issue was answered in favour of the Revenue.

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Issues: Whether the income arising from assets transferred by the assessee to his wife in connection with her consent to adoption was includible in the assessee's hands under section 64(iii) of the Income-tax Act, 1961.

Analysis: The transfer was claimed to be for adequate consideration because the wife consented to the adoption of the assessee's brother's son. The Court held that such a payment or reward for consent to adoption falls within the prohibition in section 17 of the Hindu Adoptions and Maintenance Act, 1956, because the prohibition against receiving or giving consideration for adoption applies to all persons, including the adoptive mother. Alternatively, if the transfer was treated as a provision for the wife's future security or maintenance, it was not a transfer for adequate consideration and did not fall within the exception in section 64(iii).

Conclusion: The sums derived from the transferred assets were includible in the assessee's income under section 64(iii) of the Income-tax Act, 1961, and the answer was against the assessee and in favour of the Revenue.

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