Indirect transfer attribution: a settlee's resettlement may be attributed to the original settlor and included in his holding for tax purposes.

Resettlement by a female settlee of land originally settled by her husband can constitute an indirect transfer attributable to the original settlor under a deeming provision where factual continuity of attribution to the husband is shown; such indirect transfers fall within the scope of the relevant Section 9(2)(a)(iv) and may be included in the settlor's holding for composition assessment. Conversely, a subsequent disposition by the settlee will not be treated as a coparcenary partition or the male child's coparcenary share where the settlement was executed by the wife as settlee and there is no factual basis to characterise the property as ancestral or a partition by the husband as karta.

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Issues: (i) Whether the 42 acres resettled by the wife in favour of after-born children on 24 March 1960 is an indirect transfer attributable to the husband falling within Section 9(2)(a)(iv) of the Madras Agricultural Income-tax Act and therefore to be included in the petitioner's holding for composition assessment; (ii) Whether the land settled by the wife can be treated as ancestral/coparcenary property such that the disposition to the male child on 22 September 1955 operates as his share and avoids inclusion under Section 9(2)(a)(iv).

Issue (i): Whether the resettlement by the wife is an indirect transfer attributable to the husband under Section 9(2)(a)(iv) of the Madras Agricultural Income-tax Act.

Analysis: The statutory deeming provision covers income from assets transferred directly or indirectly to a minor child otherwise than for adequate consideration. The facts show the husband in 1954 settled land in favour of his wife and minor children and thereafter continued to be assessed on the basis that the wife's holding was to be treated as the husband's for tax reckoning. The wife subsequently resettled a portion of that settled land in favour of after-born children. The chain of transactions links the later settlement to the original settlement by the husband. A resettlement by a settlee in such circumstances can be an indirect transfer attributable to the original settlor; permitting otherwise would allow circumvention of the deeming provision by intermediate settlements. Relevance of timing does not break the causal link where facts show continuity of attribution to the husband for tax purposes.

Conclusion: The 42 acres resettled by the wife constitute an indirect transfer attributable to the husband within the meaning of Section 9(2)(a)(iv) and therefore may be deemed to be part of the petitioner's holding for assessment.

Issue (ii): Whether the property was ancestral or coparcenary such that the wife's disposition operated as the son's coparcenary share and excluded inclusion under Section 9(2)(a)(iv).

Analysis: The settlement in question was executed by the wife as settlee and not by the husband as karta or as an act of division of coparcenary property. The wife held and exercised rights under the 1954 settlement for a period of years, and the later disposition by her cannot be treated as a disposition by the husband in his capacity as karta effecting a coparcenary partition. The characterisation as ancestral/coparcenary property was not established on the facts.

Conclusion: The ancestral/coparcenary argument fails; the disposition cannot be treated as the son's coparcenary share that would exclude the deeming under Section 9(2)(a)(iv).

Final Conclusion: The resettlement of the 42 acres by the wife is taxable as part of the petitioner's holding under the deeming provision and the writ petition is dismissed.

Ratio Decidendi: A settlee's subsequent settlement of land originally settled by the husband may amount to an indirect transfer attributable to the husband under a deeming provision where the facts show continuity of attribution, and such indirect transfers fall within Section 9(2)(a)(iv) for inclusion in the settlor's agricultural income.

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