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1 - 10 of 13 (0.22 seconds)Section 256 in The Income Tax Act, 1961 [Entire Act]
Commissioner Of Income-Tax, West ... vs Shri Prem Bhai Parekh And Ors on 20 April, 1970
18. We may also point out that the aforesaid decision in CIT v. Prem Bhai Parekh [1970] 77 ITR 27 (SC) was distinguished by the Supreme court in Smt. Mohini Thapar v. CIT [1972] 83 ITR 208. In the case of Smt. Mohini Thapar [1972] 83 ITR 208 (SC), the late Karam Chand Thapar had made certain cash gifts to his wife, Smt. Mohini Thapar. From our of those gifts, she purchased certain shares and the balance amount she invested. The shares earned dividends and the investments yielded interest. The interest realised and the dividends earned were included in the income of Karam Chand Thapar for the purpose of assessment. The assessee objected to the inclusion of that amount in his income. The question was whether the Department was entitled to include the dividends and interest in question in computing the taxable income of the assessee. The Income-tax Officer held that they were liable to be included in the income of the assessee. That decision was upheld by the Appellate Assistant Commissioner. On a reference, the Calcutta High Court confirmed the view taken by the Tribunal. The Supreme Court referred to the decision rendered by it in the case of Prem Bhai Parekh [1970] 77 ITR 27 (SC). On the facts of the case, the Supreme Court found that the income had a proximate connection with the transfer of the assets made by the assessee and, therefore, held that the ratio laid down in the case of Prem Bhai Parekh [1970] 77 ITR 27 (SC), was not applicable to the facts of the said case.
Commissioner Of Income-Tax, West ... vs Rajasthan Mines Ltd., Calcutta on 5 May, 1970
the said principle has been followed by the Supreme Court in its decision rendered in the case of CIT v. Rajasthan Mines Ltd. [1970] 78 ITR 45.
Commissioner Of Income Tax, Calcutta vs Prahaladrai Agarwala on 26 April, 1989
To our mind, it is apparent that the main reason why their Lordships of the Supreme Court so held in Prahladrai Agarwala's case [1989] 177 ITR 398 (SC) was that, upon an agreement by the remaining partners, the wife became a member of the partnership and the mere contribution of capita by the wife did not automatically entitle her to partnership of the firm. As the partnership was based on agreement and it was the even to agreement between the partners that brought the respondent's wife into partnership as a partner, it was held therein that the share of profits of the wife could not be included in the respondent's total income under section 64(1)(iii). The income in the said case accrued neither directly nor indirectly inasmuch as such accrual of income depended upon the volition or discretion of the partners of the firm to admit the respondent's wife into the partnership as a partner. It is in that sense that the test of proximate or remote connection has been laid down by the Supreme Court in the said case. In our view, the principles laid down in the said case would not apply to the facts of the present case at all inasmuch as, as noted earlier, after the sale of the land, which was gifted to her by the assessee's elder brother, the wife of the assessee had invested that amount received as consideration with the assessee and the assessee was paying interest to his wife on the amount invested by her. Here, we are dealing with income which has a proximate connection with the transfer of the asset made by the assessee. On a plain reading of section 64(1)(iii), it is evident that the income arising to the wife has to be included in the total income of her husband, if the following conditions are fulfilled :
Commissioner Of Income-Tax, Culcutta vs Keshavlal Lallubhai Patel on 9 November, 1964
"The connection between the fits mentioned earlier and the income in question is a remote one. The income of the minors arose as a result of their admission to the benefits of the partnership. It is true that they were admitted to the benefits of the partnership because of the contribution made by them. But there is no nexus between the transfer of the assets and the income in question. It cannot be said that that income arose directly or indirectly from the transfer of the assets referred to earlier. Section 16(3) created an artificial income. That section must receive strict construction as observed by this court in CIT v. Keshavlal Lallubhai Patel [1965] 55 ITR 637 (SC). In our judgment before an income can be held to come within the ambit of section 16(3), it must be proved to have arisen - directly or indirectly - from a transfer of assets made by the assessee in favour of his wife or minor children. The connection between the transfer of assets and the income must be proximate. The income in question must arise as a result of the transfer and not in some manner connected with it."
Mohini Thapar (Dead) By L. Rs vs C.I.T. (Central) Calcutta & Ors on 23 September, 1971
19. In the case of Prahladrai Agarwala [1989] 177 ITR 398 (SC), the respondent had made to gifts of money to his wife in November, 1960, and another gift to his mother. They became partners in a firm in which the other partners were the respondent's grandfather, his brother and a stranger. The wife contributed both the amounts of the fits as capital to the firm. The question was whether the share of profits of the wife in the firm for the assessment year 1962-63 could be included in the total income of the respondent under section 64(1)(iii) of the Act. The Tribunal held that the share of profits could be included in the respondent's total income; but, on a reference, the Calcutta High court held that the share of the profits arose to the respondent's wife primarily because the firm made a profits and although it had connection with the gifts, it did not arise as a result of the gift. The High Court further held that the admission of the respondent's wife to the firm was not in consequence of the gifts, and, therefore, the connection between the share of profits and the gifts by the respondent to his wife were too remote to be included within the provision of section 64(1)(iii). On appeal, the Supreme Court has, while confirming the decision of the High Court, held that there had to be a proximate connection between the accrual of income and the assets transferred. The Supreme Court further held that, no doubt, the wife because a partner because of the capita contributed by there in the firm, but it was upon agreement by the remaining partners that she became a member of the partnership, and the meres contribution of the capital by the wife would not automatically have entitled her to partnership in the firm. In the ultimate conclusion, the Supreme Court has held that the share of the profits of the wife could not be included in the respondent's total income under section 64(1)(iii).
Section 66 in The Income Tax Act, 1961 [Entire Act]
Commissioner Of Income-Tax, Bombay ... vs Greaves Cotton And Co. Ltd. on 4 May, 1967
In support of his submission, learned counsel placed reliance on the decision rendered by the Supreme Court in the cases of CIT v. Greaves Cotton and Co. Ltd. [1968] 68 ITR 200 and I.C.I. (India) P. Ltd. v. CIT [1972] 83 ITR 710.