2001 (6) TMI 32

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..... the Income-tax Act, 1961. The wife being prudent, instead of spending the rental income, chose to save the same and the savings so effected were put in a fixed deposit in her name. The interest accruing to her from those deposits was regarded by the Income-tax Officer as the income of the assessee for the assessment year 1979-80. The correctness of that view was questioned by the assessee in appeal. The Appellate Assistant Commissioner agreed with the assessee. The Revenue's appeal to the Tribunal against that order in appeal having proved unsuccessful, the correctness of the Tribunal's view is being con tested by the Revenue in this reference before us. Section 64(1)(iv) of the Income-tax Act refers to "such income as arises directly or .....

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..... ely, income from the invested income from the asset that had been transferred. The rental income from the transferred asset having been taxed in the hands of the assessee, the interest income derived from depositing the rental income in a fixed deposit which stood in the name of the transferee wife, cannot be deemed to be the income of the assessee. The source of the interest income derived by the assessee's wife who had saved the rental income and made the fixed deposit is not the flat that was transferred to her. The source is the money which she had deposited in the bank. There was no direct nexus between the interest which she received on her deposit and the flat which had been transferred to her name by her husband for inadequate consi .....

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..... set that had been transferred to the minor, as the bonus shares were not in existence at the time the original shares were transferred to the minor. That decision is based on the fact that the asset from which the income was derived in that case, was not the asset that had been transferred to the minor child. Section 64 is in the nature of a special provision which makes a departure from the ordinary law regulating transfers and is required to be given effect to only to the extent specifically provided for therein. It can only be applied to the income directly or indirectly realised from assets transferred or to the income realised from the transferred asset or the one substituted for the transferred asset. One other submission that was m .....

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