Indirect transfer for agricultural income-tax can arise from successive settlements where substance prevails over formal ownership steps.

A deeming provision on agricultural income-tax can treat successive settlements as an indirect transfer where the facts show a continuing chain designed to place assets beyond the provision's reach; substance prevails over formal steps, and the resulting asset value is includible in the transferor's holding. A wife's later settlement in favour of after-born children was not treated as an independent transaction when it followed an earlier settlement within the same chain. The separate argument that the property had become ancestral or coparcenary property also failed, because the wife acted in her own right and the deed had been operative for years.

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Issues: (i) Whether the settlement made by the wife in favour of the after-born children constituted an indirect transfer by the assessee within the meaning of the agricultural income-tax provision; (ii) Whether the properties settled by the wife could be treated as ancestral or coparcenary property so as to exclude the later settlement from the assessee's holding.

Issue (i): Whether the settlement made by the wife in favour of the after-born children constituted an indirect transfer by the assessee within the meaning of the agricultural income-tax provision.

Analysis: The provision created a deeming inclusion where income from assets transferred directly or indirectly by an individual to a minor child without adequate consideration was liable to be included in that individual's total agricultural income. The Court held that indirect transfer could not be confined to a narrow or mechanical meaning and had to be determined from the facts and circumstances. A settlement made by the husband in favour of the wife, followed by a resettlement by the wife in favour of the after-born children, formed part of a continuing chain of causation. Treating the wife's settlement as wholly independent would permit easy avoidance of the taxing provision.

Conclusion: The later settlement was an indirect transfer attributable to the assessee, and the resulting extent was rightly included in his holding.

Issue (ii): Whether the properties settled by the wife could be treated as ancestral or coparcenary property so as to exclude the later settlement from the assessee's holding.

Analysis: The Court rejected the contention that the later settlement represented a disposition of ancestral or coparcenary property. The settlement deed was executed by the wife in her own right and had been acted upon for several years. The property dealt with by her was therefore not property held or disposed of as coparcenary property, nor could the later benefit given to the after-born son be treated as a partition-like allotment by a karta.

Conclusion: The ancestral or coparcenary property argument failed and did not affect the assessment.

Final Conclusion: The writ petition was liable to fail because the disputed land was rightly treated as part of the assessee's holding for agricultural income-tax purposes.

Ratio Decidendi: A transfer may be treated as indirect for tax purposes where successive settlements form a continuing chain intended to place assets beyond the reach of the deeming provision, and the substance of the arrangement will prevail over its formal appearance.

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