1985 (11) TMI 7 - HC - Income Tax

Summary

Issues:
1. Interpretation of the nature of a gift made by the assessee to his wife - cash gift or gift of a property.
2. Inclusion of interest earned by the assessee's wife in the assessee's income.
3. Reframing of the question referred to the court by the assessee.

Interpretation of the nature of the gift:
The case involved a dispute regarding whether the assessee made a cash gift of Rs. 50,000 to his wife or gifted a property situated in Bombay valued at Rs. 65,000, as per a gift deed dated October 27, 1970. The Tribunal concluded that it was a cash gift of Rs. 50,000. The assessee applied for reference of three questions, but only question No. 1 was referred to the court. The court held that the Tribunal's decision on the nature of the gift was justified, but due to procedural issues, declined to answer the question.

Inclusion of interest in the assessee's income:
A dispute arose regarding the inclusion of interest earned by the assessee's wife in the assessee's income. The interest of Rs. 1,260 was accrued on rental income deposited in the wife's bank account. The Tribunal's decision on this matter was part of the overall grievance of the assessee, leading to an application for reference to the court. However, the court did not address this issue due to procedural constraints and the assessee's subsequent application for reframing the question.

Reframing of the question referred:
The assessee made an application to reframe the question referred to the court, seeking a decision on whether the interest earned by the wife could be included in the assessee's income. The court rejected this application, stating that it would circumvent the provisions of the Income-tax Act. The court emphasized that it could not address a new question of law that was not originally referred, especially when the Tribunal had declined to refer it. The court upheld the principle that only questions referred could be answered, and the application for reframing was dismissed.

In conclusion, the court declined to answer the questions regarding the nature of the gift and the inclusion of interest in the assessee's income due to procedural constraints and the rejection of the application for reframing the question. The reference was answered accordingly, with no order as to costs.