H P DANDIWALA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the instance of the assessee, the Income-tax Appellate Tribunal, Allahabad, has referred the following question of law for the opinion of this court under Sub-section (1) of Section 256 of the Income-tax Act, 1961 :

(2.) THE dispute pertains to the assessment year 1976-77. In the relevant previous year to the assessment year in dispute, the assessee was a "non-resident" and was assessed in the status of an individual. He was employed as a captain in the Merchant Navy and was posted at Hong Kong. THE assessee remitted certain sums to the home savings bank account of his wife at Allahabad maintained with the Central Bank of India and out of the sums so received, the assessee's wife invested certain amounts in fixed deposits with various companies, on which she earned an income of Rs. 14,652 as income from interest on fixed deposits.

(3.) THE stand taken by the assessee was that he had transferred the various sums to his wife for meeting the household expenses and since due to his service conditions, the assessee's wife had necessarily to stay separate from the assessee, the income earned by the assessee's wife out of the savings could not be clubbed in the hands of the assessee by invoking the provisions of Section 64(1)(iv) of the Act . This plea was repelled by the appellate authorities, as already stated, initially by the Appellate Assistant Commissioner of Income-tax, Allahabad, and thereafter by the Income-tax Appellate Tribunal. It was found as a fact that out of the amounts which were transferred by the assessee to his wife's account in the previous year relevant to the assessment years 1974-75 and 1975-76, only a meagre amount of Rs. 2,000 was withdrawn for expenses and the wife of the assessee stayed with her parents. A further finding had also been recorded that it was only on account of their own convenience that the wife and daughter of the assessee were staying in India, while the assessee was serving abroad. THE Income-tax Appellate Tribunal on consideration of the material that was placed before it, recorded its finding as under :