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TMI Blog1972 (7) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... f each of the assessees, a sum of Rs. 10,000 was fixed as mehr (dower) as disclosed from the respective sianamas dated January 30, 1936, and 6th Aban 1339 Fasli, copies of which are annexures "A" & "B" , respectively. On December 31, 1959, the assessees executed agreements marked as annexures "C" & "D" appended to the statement of the case with their wives, whereunder the dower of Rs. 10,000 originally fixed at the time of their marriages was enhanced to Rs. 2,00,000. The recitals of the agreements reveal that the agreements have been entered into by mutual consent of both the parties and the wives had accepted the enhancement of the dower and affixed their signatures to those agreements. Paragraph 3 of the agreements, which is material for our purpose, reads thus : " The said mehr shall become due on dissolution of the marriage by death of either of the parties herein or otherwise in contingencies provided by law. It shall however be optional with the husband to pay and discharge the said mehr earlier at any time hereafter." The enhanced dower was deemed to have been incorporated in the original marriage contract and the same became due and payable on the dissolution of the marr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respective wives in partial discharge of their debt were not fruitful. Aggrieved by the decision of the Appellate Assistant Commissioner, the assessees preferred further appeals to the Income-tax Appellate Tribunal. The Tribunal was of the view that, under the Mohammadan law, mehr or dower, whether prompt or deferred, was in the nature of an unsecured debt and it was open to the husband to enhance the same at any time subsequent to the marriage, and in the case of a deferred dower, although the wife cannot demand payment until the marriage is dissolved either by the death of the husband or by divorce, it (dower) shall continue to be a debt so far as the husband is concerned and he can discharge the same at any time even before the dissolution of the marriage. The transfer of property by the husband to the wife in settlement of the dower debt was held to be a transfer for adequate consideration. Hence, it was held that the transfer of the properties by the assessees to their wives was in discharge of a portion of the enhanced dower debt for adequate consideration and the value of such properties need not be included in the net wealth of the assessees for the years in question and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wealth' means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date.... " "Assessee" is defined under clause (c) or section 2 as a person by whom Wealth-tax or any other sum is payable under the Act and includes every person against whom any proceeding for the determination of tax under the Act his been taken and a person who is deemed to be an assessee or is in default under the Act. The net wealth held by an assesses on the valuation date has to be computed in accordance with the provisions of the Act. All the debts owed by the assessee on the relevant valuation date have to be deducted from the gross assets, wherever located, belonging to the assessee in order to arrive at the net wealth of such assessee. Section 4 is enacted to safeguard the revenue against transfers without adequate consideration by an individual to his or her spouse or minor children and revocable tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of assets is for adequate consideration or in connection with an agreement between the husband and wife to live apart. In the light of the aforesaid discussion, we shall proceed to examine the applicability of the provisions of section 4(1)(a)(i) to the facts of the present case. In the instant case, admittedly, the sale deeds whereunder transfer of assets was made by each of the assessees in favour of his respective wife on November 28, 1960, and October 15, 1961, were executed when the relationship of husband and wife was subsisting. The property so transferred and whose value was sought to be included in the net assets of the assessees, was held by their spouses on the valuation dates relevant for the assessment years in question. The transfers of the assets were not made in connection with an agreement between the assessees and their wives to live separately. The assessees being individuals, though Muslims by religion the provisions of section 4 are attracted. The only other requisite condition for the applicability of sub-clause (i) of clause (a) to sub-section (1) of section 4 is that the transfers must be found to be without adequate consideration. The short question, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al love and affection may be regarded as good consideration as seen from the provisions of section 25 of the Indian Contract Act which states that an agreement without consideration is void. However, such consideration cannot be termed as "adequate consideration" which means valuable consideration. In other words, adequate consideration must be held to be valuable consideration which can only be measured or tested on the basis of money's worth. "Adequate consideration", within the meaning of section 4(1)(a)(i), must, in our judgment, be construed as valuable consideration capable of being compared and measured with money or money's worth. Where a transfer is gratuitous or made only out of natural love and affection but not for any valuable consideration measurable in money or money's worth, it is not for adequate consideration within the meaning of section 4(1)(a)(i) of the Act. In order to hold that a particular transfer of an asset is for adequate consideration in the words of Cheshire and Fifoot : " The promise must, indeed, have been procured by the offer of some return capable of expression in terms of value. A parent, who makes a promise 'in consideration of natural love and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) prompt and deferred. Dower which is payable on demand is called prompt dower, and the one payable on dissolution of marriage by death or divorce is know as deferred dower. The (lower maybe either prompt or deferred, depending upon the terms of the agreement entered into between the husband and wife at the time of the marriage. It may also be partly prompt and partly deferred. The wife is competent to realise the prompt dower either in whole or in part at any time before or after consummation. She can either demand the entire prompt dower or a portion of it. Where the payment of the dower is postponed until demanded by the wife, such dower is also prompt dower but not deferred dower. Where there is no agreement at the time of the marriage regarding the nature of the dower, the whole of it must be regarded according to Shia law as "prompt", whereas in the case of Sunnis, the rule is to regard part as "prompt" and the remaining as "deferred", the proportion being regulated by custom, and in the absence of such custom, by the status of the parties. The wife is at liberty to waive or remit the dower or any portion of it in favour of her husband or heirs. The wife would be entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Considered : Naturally, the idea of payment of interest on the deferred portion of the dower does not enter into the conception of the parties. But the dower ranks as a debt, and the wife is entitled, along with other creditors, to have it satisfied on the death of the husband out of his estate. Her right, however, is no greater than that of any other unsecured creditor, except that if she lawfully, with the express or implied consent of the husband, or his other heirs, obtains possession of the whole or part of his estate, to satisfy her claim with the rents and issues accruing therefrom, she is entitled to retain such possession until it is satisfied. This is called the widow's lien for dower, and this is the only creditor's lien of the Mussulman Law which has received recognition in the British Indian courts and at this Board. " This brings us to consider what is meant by "debts owed" within the meaning of section 2(m) of the Act and whether the dower can be said to be owed as a debt on the relevant valuation dates. There is a catena of cases as to what is meant by debt, but suffice it to refer to the leading case, Kesoram Industries and Cotton Wills Ltd. v. Commissioner of W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of liability, would not have the effect of converting the liability which attaches under such notice under section 18A into a contingent liability'. " This case is an authority for the proposition that an ascertained sum of money due and payable as per the demand is a statutory liability amounting to a debt due and payable in praesenti and such a debt must be termed to be a debt owed on the valuation date and the same cannot be converted into a contingent liability on account of the fulfilment of a condition subsequent to that. Ours is a converse case. A contingent debt cannot be converted into a debt in praescnti until the event happens, just as a debt in praesenti cannot on the same analogy be converted into a contingent one on the fulfilnient of a condition subsequently. On the application of the aforesaid principles, we are in entire agreement with the contention of Sri P. Rama Rao, the learned counsel for the revenue, that the assessees were not liable on the dates when the properties in question were transferred, or on the respective valuation dates, to pay the dower to their wives. In the present case, the original dower of Rs. 10,000 fixed at the time of the marriage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... husband to pay and discharge the mehr earlier at any time thereafter, and, hence, his clients are entitled to pay the same as per the deeds of transfer executed by them. This plea is based on the assumption that the assessees have a right to make such provision. The parties are at liberty to settle the terms relating to the quantum as well as the nature and mode of payment of the dower at the time of, or prior to the marriage, contract and the wife would be entitled to demand and sue for the recovery of the whole of the prompt dower or a portion of it before or after the dissolution of the marriage and it is also transferable. But, however, the parties are not competent under their personal law to convert the deferred dower into a prompt one either by their conduct or by executing any documents. That apart, the deferred dower would not become a debt owed by the assessee during the subsistence of the marriage. The right to claim mehr would arise only in the case of prompt dower as it is payable immediately on marriage if demanded by the wife, whereas in the case of deferred mehr or dower, it is payable on dissolution of marriage or on the happening of some specified event but not o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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