Law: Income Tax Act (XI of 1922)

Section:

Income-tax Act (XI of 1922)   -- Ss. 16(3)(a)(iii) & 16(3)(c). Transfer of assets to wife-Transfer before marriage in consideration of proposed marriage-Marriage effected- Whether income from assets can be included in husband's income-Whether marriage "adequate consideration"-Revocability of transfer-Applicability of Ss. 16(3)(a)(iii), 16(3)(c).   In order to attract the application of section 16(3)(a)(iii) of the Income-tax Act, 1922 it is not necessary that the person to whom the properties were transferred should have been the assessee's wife at the time of the transfer. Section 16(3)(a)(iii) will apply even to cases where property was transferred to a prospective wife before the marriage in consideration of the marriage which is intended to take place. The question to be considered in applying section 16(3)(a)(iii) is whether at the time when the income is sought to be assessed the relationship of husband and wife existed between the parties.   Though marriage may be good and valuable consideration for transfer of property to a lady who agrees to marry the transferor, since it is not possible to determine the adequacy of such consideration, marriage cannot be regarded as "adequate consideration" within the meaning of section 16(3)(a)(iii).   Where a person transfers some property to a woman "in consideration of the forthcoming marriage" between them, and the marriage takes place, the income accruing to the wife from the property after the marriage can be included in the husband's income under the provisions of section 16(3)(a)(iii) of the Income-tax Act, 1922 but not under the provisions of section 16(1)(c) inasmuch as the transfer becomes irrevocable as soon as the marriage takes place.   Alt v. Alt 4 (1862) 4 Giff 84 ; Behramji Sorabji Lalkaka v. Commissioner of Income-tax (1948) 16 1 T R 301 ; Cohen v. Sellar (1926) 1 K B 536 ; Commissioner of Income-tax v. Sir Kikabhai Premchand (1948) 16 I T R 207 ; Commissioner of Income-tax v. Sodra Devi (1957) 32 I T R 615 ; De Manneville v. Crompton 35 E R 138 ; Estcourt v. Estcourt 1 Cox. 20 ; Goldicutt v. Townshend 54E R 437 ; Halifax Joint…