COMMISSIONER OF INCOME TAX Vs. T NARASIMHALU CHETTIAR

JUDGEMENT

(1.) THE facts leading to this reference are as follows : THE assessee is the sole proprietor of a lodge and is running a business there. When he became an under-trial prisoner, he executed a settlement deed on August 30, 1963, transferring the hotel business to his wife. Even though the documents mentioned that it was in consideration of his natural love and affection, admittedly, the amounts due from his wife in the current account maintained between them had been adjusted for a sum of Rs. 2, 000 which was the value mentioned in the document for the goodwill and furniture.

(2.) THE Income-tax Officer considered that it was inadequate as he estimated the goodwill at Rs. 17, 000 and the furniture at Rs. 1, 500. On appeal, the Appellate Tribunal found that the profit for the immediately preceding year was only very small and if reasonable remuneration to the proprietor was to be taken into account, the goodwill could not be much. THE Tribunal also noted that the furniture was very old having been used for the business for a long time and found that the amount of Rs. 2, 000 was adequate consideration for the transfer. At the instance of the Revenue, the following question has been referred "Whether, on the facts and in the circumstances of the case, and having regard to the deed of settlement executed on August 30, 1963, the Appellate Tribunal was right in holding that the provisions of section 64(iii) could not be invoked in the assessee's case for bringing to tax the income from Model Lodge transferred to the assessee's wife ?"This question challenges only the finding of fact that there was adequate consideration for the transfer of the business and, therefore, no addition can be made under section 64(iii) of the Act.