B. Palaniswamy vs Commissioner Of Income-Tax on 14 March, 1996
11. The Rajasthan High Court had an occasion to consider a question of similar nature while considering the provisions of section 64(1)(vi), Explanation 3, to section 64(1) of the Income-tax Act, 1961, in CIT v. Shivji Ram Agarwal [1986] 162 ITR 793, wherein it was held that : "a perusal of Explanation 3 to section 64(1) of the Income-tax Act, 1961, shows that it applicability is confined to clauses (iv) and (v) of section 64. It does not apply to section 64(1)(vi) and income from investments in business made with assets gifted to a daughter-in-law cannot be clubbed with that of the assessee under that provision. It was further pointed out that the question whether there is intimate connection between a gift made by the assessee to his daughter-in-law and the daughter-in-law becoming a partner with the assessee in a firm by investing the amount gifted is a question of fact".