9911796707
TMI Blog1988 (8) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... computation of the total income of the assessee under section 64 of the Income-tax Act, 1961 ?" The facts of this case, shortly, are that the assessee, an individual, was the real owner of the property at No. 159, Chittaranjan Avenue, Calcutta though it was nominally purchased under a sale deed dated June 10, 1940, in the name of his first wife, Bhagwan Devi, who died on January 2, 1953, leaving three sons and five daughters. After the death of the first wife, the assessee married one Kusumlata, daughter of Srimati Lakshmi Devi of Benaras, on December 2, 1954. It was the case of the assessee that prior to the marriage, there were negotiations between the assessee and Srimati Lakshmi Devi and there was a pre-nuptial agreement under which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was an adequate consideration for the transfer of the property in trust for the benefit of the unborn children and that the provisions of section 16(3) had no application. In the appeal before the Appellate Assistant Commissioner, the assessee relied upon the affidavits of Srimati Lakshmi Devi, Srimati Kusumlata More and the affidavits of the two mediators, Sri Anantram Poddar and Sri Keshordeo Sangarnia. The Appellate Assistant Commissioner held that the pre-nuptial agreement set up by the assessee sounded incredible in spite of the affidavits of several parties. The Appellate Assistant Commissioner having confirmed the above finding of the Income-tax Officer, the assessee carried the matter in further appeal to the Tribunal. The Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order in the assessee's appeal for the assessment year 1961-62, upheld the assessee's contention and directed the exclusion of the income from the property at No. 159, Chittaranjan Avenue, Calcutta, from the assessee's total income. The question which has been referred to this court is whether the income arising out of the said property being premises No. 159, Chittaranjan Avenue, Calcutta, was includible in the computation of the total income under section 64 of the Income-tax Act, 1961. The answer to this question will depend on the fact whether the transfer was made by the assessee for adequate consideration. Section 64(iv) of the Act will apply only if the assets are transferred directly or indirectly to the wife by the husband otherw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chittaranjan Avenue, Calcutta, in favour, and for the sole benefit of her children for their maintenance, education and bringing up and that the said issues of my daughter will be entitled to take such rents and profits thereof in equal shares." She has referred to the said negotiation in the presence of Keshordeo Sangarnia and Anantram Poddar. She wanted his written consent for those terms, which the petitioner gave by his letter dated November 5, 1954. The marriage took place on December 2, 1954. Three sons were born out of the marriage by about 1960 and a settlement was executed on August 10, 1960, by the assessee. The deed of settlement refers to the pre-nuptial pledge and assurances. The trust is for the benefit of three minor sons. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with five sons and three daughters. On these facts, the Tribunal was justified in accepting the existence and genuineness of the pre-nuptial agreement. The next question is whether there was any adequate consideration. The Supreme Court, in the case of Tulsidas Kilachand v. CIT [1961] 42 ITR 1, held that the expression "adequate consideration" occurring in section 16(3)(b) of the 1922 Act denotes consideration other than love and affection. The word "adequate" means, equal to the need, fully sufficient and proportionate. According to Black's Law Dictionary (15th Edition), adequate consideration means such consideration which is equal, or reasonably proportioned to the value of that for which it is given. It, therefore, postulates that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N. Mafatlal v. CIT [1977] 109 ITR 602. There, the Bombay High Court was concerned with the words "immediate or deferred" occurring in section 64(v) of the 1961 Act. This decision has no relevance to the facts of this case. Mr. Moitra has also relied on a decision of the Supreme Court in Philip John Plasket Thomas v. CIT [1963] 49 ITR 97. There, the Supreme Court held that in order to attract the application of section 16(3)(a)(iii) of the Indian Income-tax Act, 1922, the relationship of husband and wife must subsist not only at the time of the accrual of income from the assets but also when the transfer of assets is made. The words "wife" and "husband" in section 16(3)(a) must be taken in their primary sense which is clearly indicative o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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