9911796707
TMI Blog1989 (3) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... the inclusion of Rs. 17,165 in the assessee's total income under section 64(1)(iii) of the Income-tax Act, 1961 ?" In this case, the assessment year involved is 1974-75 for which the relevant accounting year is the year ending on March 31, 1974. The facts found by the Tribunal as contained in the statement of case are as under : The assessee was the owner of the property at No. 97, Golf Links, New Delhi, and he himself and his sons were partners of a firm styled as Paris Dress Makers carrying on business at Calcutta, the share of the assessee in that partnership business being one-fourth. By a gift deed dated January 30, 1973, the assessee gifted his property at No. 97, Golf Links, and also his one-fourth interest in Paris Dress Make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l account, she being his benamidar and that the amount of Rs. 25,000 represented the assessee's income from undisclosed sources and added that amount in the assessee's total income. Being aggrieved by the aforesaid addition, the assessee preferred an appeal before the Appellate Assistant Commissioner. That appellate authority confirmed the inclusion of the amount of Rs. 11,145 being the income from the property at No. 97, Golf Links, in the assessee's total income. The addition is not disputed by the assessee. As regards the sum of Rs. 17,165 being the one-fourth share of profit of the assessee's wife from the business of Paris Dress Makers, the Appellate Assistant Commissioner held that there was no proximate connection between the trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 27, to the spouse of such individual from assets transferred directly or indirectly to the spouse by such individual otherwise than for adequate consideration or in connection with an agreement to live apart;" The contention of Mr. Poddar is, where the asset transferred is money or even a share in a partnership, but the income arises out of the business carried on by the partnership, then it cannot be said that any income has arisen directly or indirectly to the assessee from the asset transferred directly or indirectly to the spouse of the assessee. There is no dispute in this case that a gift was made. The gift was made to the wife. The wife, in partnership with other partners, carried on the partnership business. It is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the benefits of the partnership because of the contribution made by them. But there is no nexus between the transfer of the assets and the income in question. It cannot be said that that income arose directly or indirectly from the transfer of the assets referred to earlier. Section 16(3) of the Act created an artificial income. That section must receive strict construction as observed by this court in CIT v. Keshavlal Lallubhai Patel [1965] 55 ITR 637 (SC). In our judgment, before an income can be held to come within the ambit of section 16(3), it must be proved to have arisen-directly or indirectly-from a transfer of assets made by the assessee in favour of his wife or minor children. The connection between the transfer of assets and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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