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Issues:
1. Interpretation of section 64(1)(iv) of the Income-tax Act, 1961. 2. Assessment of income earned by the wife of the assessee. 3. Application of provisions regarding transfer of assets to spouse without adequate consideration. 4. Determination of liability for income tax assessment. Detailed Analysis: The judgment by the High Court of Allahabad involved the interpretation of section 64(1)(iv) of the Income-tax Act, 1961. The case revolved around the assessment year 1976-77, where the assessee, a non-resident employed in the Merchant Navy, remitted sums to his wife's bank account in India. The wife then invested these amounts in fixed deposits, earning an income of Rs. 14,652 as interest. The income was protectively assessed in the wife's hands, but later also assessed in the assessee's income invoking section 64(1)(iv) of the Act. The primary issue was whether the transfer of funds by the assessee to his wife constituted income liable for assessment under section 64(1)(iv). The assessee argued that the transfers were for household expenses, as his wife had to stay separately due to his service conditions. However, the appellate authorities rejected this argument, finding that only a small portion of the funds was used for expenses, and the wife stayed with her parents for convenience. The Income-tax Appellate Tribunal concluded that the transfers were not for adequate consideration or in connection with an agreement to live apart, bringing them within the scope of section 64(1)(iv). The Tribunal's findings indicated that the transfers were made without adequate consideration or an agreement to live apart, making the assessee liable for the income earned by his wife. As a result, the Tribunal's decision to assess the interest income of Rs. 14,652 in the assessee's hands was upheld by the High Court. The court answered the question in favor of the Revenue, affirming the assessee's liability for the assessment of the income under section 64(1)(iv) of the Income-tax Act, 1961.
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