Law:

Section:

Section 60 of the Income-tax Act, 1961 (Corresponding to section 16(1)(c) of the Indian Income-tax Act, 1922) - Transfer of income - Where there is no transfer of assets - Whether throwing of self-acquired property into hotchpot of family amounts to any transfer of such property to assessee's wife or son - Held, no FACTS RG and RP were possessed of individual and separate properties. By two separate declarations made on 26-3-1959, RG and RP declared that 500 fully paid shares of a limited company by name RGRP Pvt. Ltd. were thrown into the common hotchpot of the joint Hindu undivided family and from the date of the said declaration the said 500 shares belonged to the Joint Hindu undivided families and they would not have any interest or title therein in their individual capacity. The ITO took the view that the income earned and of the shares was includible in the assessment of RG and RP. The Tribunal held that income from those shares was not includible in the income of RG and RP. On reference : HELD A mere reading of the declaration made it clear that with effect from 26-3-1959, the 500 shares of the company ceased to be the property of either RG or RP, but they became the property of the respective joint Hindu families of the two brothers. Thus, it could not be said that the income in instant case arose from assets remaining the property of the settlor or disponer. Further, there was nothing in the recitals of the declaration to indicate that the income of those 500 shares or the shares which are thrown into the common hotchpot could be retransferred to him directly or indirectly. Under section 16(3)(b) of the 1922 Act so much of the income of any person as arose from assets transferred otherwise than for adequate consideration to the person by such individual for the benefit of his wife or a minor child or both, should be included in computing the total income of an individual. The provisions of that sub-clause could only be attracted if there was a transfer of the 500 shares within the meaning of that sub-section. As held in Damodar Krishnaji Nirgude v. CIT [1962] 46 ITR 1252 (Bom.) throwing of self-acquired property into the hotchpot of the family does not…

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