Law:

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JUDGMENT P.B. Mukharji, J.-This income-tax reference under section 66(1) of the Income-tax Act raises the two following questions of law for our decision: "In the facts and circumstances of these cases, whether the dividends paid by J. Thomas and Co. Ltd. to Mrs. Judith Thomas, grossed up to the sums of Rs. 97,091, Rs. 78,272, Rs. 1,00,000 and Rs. 16,385 respectively for the four years in question could be included in the income of Mr. P.J.P. Thomas and be taxed in his hands under the provisions of section 16(3)(a)(iii ) of the Indian Income-tax Act? In the facts and circumstances of these cases, whether the dividends referred to above could be included in the total income of Mr. P.J.P. Thomas under the provisions of section 16(1)(c) of the Indian Income-tax Act?" The Tribunal held that the transfer of shares in question in this case was hit by section 16(3)(a)( iii) of the Income-tax Act and also held that such transfer could be construed to be a revocable one within the meaning of section 16(1)(c) of the Act. The facts giving rise to these questions of law may be briefly stated. The assessee is P.J.P. Thomas who held 750 "A" shares in J. Thomas and Co. Ltd., Calcutta. He entered into an engagement to marry one Mrs. Judith Knight. The engagement was announced on the 3rd September, 1947. The assessee and Mrs. Judith Knight on the 10th December, 1947 presented to the company an application to transfer the said shares to Mrs. Judith Knight. The company transferred those shares to Mrs. Knight and registered the same in the name of Mrs. Knight on its books on the 15th December, 1947. Marriage took place between the assessee and Mrs. Judith Knight, within three days after the registration, on the 18th December, 1947. The fact of the marriage was communicated to the company on the 26th January, 1948, and the name of Mrs. Judith Knight was rectified as Mrs. Judith Thomas in the books of the company. It is undisputed that during the relevant period the shares stood registered in the name of the assessee's wife and the income in question arose to her as the wife of the assessee. The four accounting years with which the assessments are concerned are those ending…

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