BANSILAL VYAS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AN interesting problem has come up to us through this reference. The question on which our opinion is sought is :

(2.) THIS is a reference at the instance of the assessee. The material facts are : The assessee, who is an old gentleman doing business, did not have any male children. He wanted to take his younger brother's son in adoption. Since this was after the Hindu Adoptions and Maintenance Act of 1956, his wife's consent became necessary. The lady, however, was not willing to give her consent except under certain conditions. In her letter dated December 1, 1964, she expressed apprehension that the proposed adoption would curtail her prospective rights to inherit all the properties by one-half and also for the reason that the adopted son and she might not be able to live together amicably. So, in order to avoid all such troubles in future and to safeguard her own interests, and to ensure a comfortable living for herself consistent with her status, she was willing to give her consent to such an adoption subject to certain conditions specified in that letter itself. A sum of Rs. 50,000 should be settled on her in cash with absolute rights. She will have the liberty to invest that amount in her own account in her husband's business at an agreed rate of interest. He should also settle a newly constructed house on her with absolute rights; If these conditions are complied with, she would be willing to agree to the adoption.

(3.) WE do not think that it is necessary to consider the question whether the decision of this court in Potti Veerayya Sresty v. Commissioner of Income-tax [1972] 85 ITR 194 (AP) needs reconsideration as indicated by the Tribunal and suggested by Sri Anjaneyulu during the course of his arguments before us. The question is capable of easy answer, reading Section 64(iii) of the Income-tax Act with Section 17 of the Hindu Adoptions and Maintenance Act. WE have already noted that the assessee's positive contention before the income-tax authorities was that he made the settlement for adequate consideration, viz., for obtaining the consent of his wife for adoption. If such is the position, Section 17 prohibits payment of consideration for obtaining consent for adoption. Section 17(1) says :