Law: Income Tax Act, 1922

Section: 16(3)

Section 64 of the Income-tax Act, 1961 (Corresponding to section 16(3) of the Indian Income-tax Act, 1922) - Transfer of assets - For benefits of spouse, etc. - Assessment year 1959-60 - Assessee was karta of HUF - On 7-12-1957, a document was executed whereunder assessee purported to become divided in status - Said document was registered on 21-2-1958 - On that, date, assessee wrote to various companies, in which family held shares, instructing companies to alter name of owner on books of companies in respect of those shares according to mode of division entered into on partition - HUF owned 3293 shares in 'S' Ltd. - Of those, 1000 shares were transferred to assessee's wife and 500 shares to each of his two minor daughters - Thereupon, assessee filed his return of income in status of individual - Assessee's claim was that in respect of 2000 shares which had been given to wife and two minor daughter of assessee at time of partition, dividend income therefrom was not assessable in his hands - ITO included income from dividends arising from transferred shares in total income of assessee under section 16(3) of 1922 Act, on ground that said shares were transferred subsequent to date of partition and hence transfers were made by him as individual - Tribunal upheld ITO's order - Whether it is not unusual to find that properties of Hindu undivided family stand in name of one or other member of family - Held, yes - Whether, therefore, solely because division in status has taken place, it does not follow that properties standing in name of one or other member of family become his individual property, so that, if there is a subsequent allocation of those items among members of family, one can postulate a valid transfer by one member to another - Held, yes - Whether, consequently, in instant case, inclusion of dividend amount in respect of 1000 shares belonging to assessee's wife and 500 shares each to assessee's minor daughters in total income of assessee under section 16(3) of 1922 Act was not lawful - Held, yes FACTS The assessee was the karta of a HUF and was assessed as such in the previous assessment years. On 7-12-1957, a document was executed, whereunder the…

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