Law: Income Tax Act, 1922

Section: 16(3)

Income-tax Act (XI of 1922), S. 16(3)-Transfer of assets to not legally wedded wife and illegitimate children-Income from assets whether can be included in total income of transferor. The assessee, who was a Brahmin residing in South Travancore, while his marriage to a lady of his own caste was still subsisting, lived with a Nair lady G, and had through her three sons and a daughter. By a deed of settlement the assessee settled certain amounts of money to G and each of the four children through her. The trustees of the settlement invested those amounts in shares in companies floated by the assessee. The question was whether the dividend income in respect of those shares could be included in the total income of the assessee under section 16 (3) of the Income-¬tax Act Held, (i) that as the local statutes prohibited the performance of marriage during the continuance of a prior marriage, G was not the lawful wedded wife of the assessee and their children were not legitimate ; (ii) that "wife" in section 16(3) (a) (iii) meant legal wife ; and "child" in section 16 (3) (a) (iv) meant legitimate child ; (iii) that, therefore, the income derived by G and her children from the assets transferred by the assessee were not covered by section 16 (3) (a) (iii) and (iv) and could not be included in the assessee's total income. Commissioner of Income-tax v. Rajasundaram (1950) 18 I T R 145 and Maker: v. Makein (1955) 1 All E R 57 ref. STATEMENT OF CASE By this application, the assessee requires the Appellate Tribunal to refer to the High Court certain questions of law, which are said to arise out of the order of the Tribunal dated 11th December, 1956, in I. T. A. No. 4672 of 1955-56. Inasmuch as, in our opinion, a question of law does arise out of the aforesaid order of the Tribunal, we hereby draw up a statement of the case, agreed to, by the parties, and refer it to the High Court of Kerala at Ernakulam under section 66 (1) of the Indian Income-tax Act. 2. The assessee was a salt manufacturer in South Travancore producing and selling salt from pans and factories owned by him and taken on lease from others. He married K. Lakshmi Ammal, a Brahmin lady, several years before…

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