Clubbing of spouse-transferred property income upheld where transfer lacked adequate consideration and no separation agreement existed.

Section 64 operated as an anti-avoidance clubbing provision, so income from house property transferred by a husband to his wife was includible in the husband's total income where the transfer was without adequate consideration and no agreement to live apart was found. The validity of the gift under Muslim personal law did not prevent inclusion because the statutory conditions were satisfied on the facts. The income was therefore correctly clubbed in the assessee's hands, with the issue decided in favour of the Revenue.

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Issues: Whether income arising from house property transferred by a husband to his wife was includible in the husband's total income under section 64 of the Income-tax Act, and whether the validity of the gift under Muslim personal law prevented such inclusion.

Analysis: Section 64 is an anti-avoidance provision intended to prevent tax evasion by clubbing in the transferor's hands income arising from assets transferred to a spouse otherwise than for adequate consideration or in connection with an agreement to live apart. On the facts found, the transfer was to the wife by the husband, there was no adequate consideration, and there was no finding of any agreement to live apart. In those circumstances, the statutory conditions for inclusion were satisfied, and it was unnecessary to examine the validity of the gift under personal law.

Conclusion: The income from the house property was correctly included in the assessee's total income; the question was answered in favour of the Revenue and against the assessee.

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