PORBUNDERWALLA K K Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) TWO questions have been referred for our decision as under :

(2.) WHETHER in accordance with the provisions of section 16(3)(a)(iii) the sum of Rs. 13,918 and Rs. 14,586 can be properly included in the computation of the assessee's total income of the previous years ended March 31, 1958, and March 31, 1959, relevant to the assessment years 1958-59 and 1959-60 respectively ?"

(3.) IN order to arrogate to the father an intention indirectly to transfer, it is now settled law that some causal connection must be established between the two transfers. IN Commissioner of INcome-tax v. Wadilal Chunilal this court had occasion to consider a case of two cross-transfers. The assessee had made gifts amounting to Rs. 1,50,000 to the wife and minor son of his son, K. Five months later, K made a gift of Rs. 1,50,000 to the assessee's wife who was the step-mother of K. The tax authorities held that there was an indirect transfer of a sum of Rs. 1,50,000 by the assessee to his wife and taxed the previous income including the income accrued thereon as if it was income in his hands. This court pointed out that there was nothing to show that the gift made by K to the assessee's wife was made in consideration of the assessee's gifts to K's wife and son, or that the gifts were part of a concerted action on the part of the assessee and his son and so there was no justification for holding that the amount of Rs. 1,50,000 given by K to the assessee's wife was an assets indirectly transferred by the assessee to his wife. At page 309, the Division Bench held :