1985 (4) TMI 63 - HC - Income Tax

Summary

Issues Involved:
1. Validity and competence of the transfer of property in lieu of deferred dower (Meher) under Muslim law.
2. Whether the transfer of property to the wife in lieu of deferred dower constitutes adequate consideration under Section 64(1)(iv) of the Income Tax Act, 1961.
3. Whether the deferred dower can be paid before the dissolution of marriage.

Issue-wise Detailed Analysis:

1. Validity and Competence of the Transfer of Property in Lieu of Deferred Dower:

The court examined whether the property transferred by late Babu Khan to his wife in 1928 in lieu of deferred dower was valid under Muslim law. The Tribunal found that the transfer indeed took place in 1928, about one year after the marriage, and that the property belonged to Mrs. Babu Khan. The court accepted this finding. The Revenue contended that, under Muslim law, deferred dower is payable only upon the dissolution of marriage by death or divorce, and hence, the transfer was invalid. However, the court noted that dower (Meher) is a sum the wife is entitled to receive from the husband in consideration of marriage, and it can be prompt or deferred. The court cited various legal texts and precedents to establish that dower is an obligation imposed on the husband and can be agreed upon at the time of marriage or later. The court concluded that it is a matter of mutual agreement between the parties and that there is no prohibition in Muslim law against paying deferred dower before the stipulated event.

2. Adequate Consideration under Section 64(1)(iv) of the Income Tax Act, 1961:

The court addressed whether the transfer of property to the wife in lieu of deferred dower constitutes adequate consideration under the Income Tax Act. The Tribunal had rejected the assessee's contention, following a previous decision in CWT v. Khan Saheb Dost Mohd. Alladin, which held that deferred dower is not a debt in praesenti and hence, the transfer cannot be considered adequate consideration. The court, however, disagreed with this view. It emphasized that dower is a debt arising from a present obligation, though its payment is postponed. The court held that the deferred dower is not a contingent debt but a vested right, and the husband can choose to pay it before the stipulated event. Therefore, the transfer of property in lieu of deferred dower is for adequate consideration within the meaning of Section 64(1)(iv) of the Act.

3. Payment of Deferred Dower Before Dissolution of Marriage:

The court examined whether it is permissible under Muslim law for a husband to pay deferred dower before the dissolution of marriage. The Revenue relied on previous decisions that suggested deferred dower is payable only upon dissolution of marriage. However, the court cited various precedents and legal texts to establish that while the wife cannot demand deferred dower before the stipulated event, the husband can choose to pay it earlier. The court held that the deferred dower is a vested right and not contingent, and there is no prohibition in Muslim law against the husband accelerating the payment of deferred dower. The court concluded that the husband can legally transfer property to his wife in lieu of deferred dower during his lifetime.

Conclusion:

The court answered the question referred to it in the negative, i.e., in favor of the assessee and against the Revenue. It held that the transfer of property to the wife in lieu of deferred dower is valid and constitutes adequate consideration under Section 64(1)(iv) of the Income Tax Act, 1961. The court also recognized the husband's right to pay deferred dower before the dissolution of marriage. Consequently, the court answered the related question in R.C. No. 160 of 1978 in the affirmative, holding that the payment of Rs. 50,000 by the assessee to his wife towards the liquidation of Meher debt is for adequate consideration. No costs were ordered in both cases.