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Section 64 of the Income-tax Act, 1961 [Corresponding to section 16(3) of the Indian Income-tax Act, 1922] - Transfer of assets - For benefit of spouse, etc. -Whether dividend income deemed to have been distributed to assessee's wife and minor children under section 23A of 1922 Act was not assessable in hands of assessee under section 16 of 1922 Act - Held, yes FACTS The question came up for consideration in instant reference was whether dividend income deemed to have been distributed to the assessee's wife and minor children under section 23A of 1922 Act was assessable in the hands of assessee under section 16 of 1922 Act. HELD The words used in section 16(3) of 1922 Act are "so much of the income of a wife of minor child of such individual as arises directly or indirectly." It is not possible to say that what is deemed to be an income for the purpose of section 23A of 1922 Act by virtue of a legal fiction is an income which arose directly or indirectly within the meaning of section 16(3) of 1922 Act. Further, under section 23A of 1922 Act the fictional income is included in the total income of the wife or minor child, whereas under section 16(3) of 1922 Act it has to be included not in their total income but of the husband or the father as the case may be. In the light of the above and in view of decision of Bombay High Court in CIT v. Phirozsaw Pallonji Mistry [1959] 36 ITR 582 it was to be held in the instant case that dividend income deemed to have been distributed to the assessee's wife and minor children under section 23A of 1922 Act was not assessable in the hands of the assessee under section 16 of 1922 Act. Note: The decision was in favour of assessee. CASES REFERRED TO CIT v. Phirozshaw Pallonji Mistry [1959] 36 ITR 582 (Bom.) and George N. Houry v. CIT [1960] 40 ITR 413 (PC). JUDGMENT M.S. Menon, CJ.-This is a reference by the Income-tax Appellate Tribunal, Madras Bench, under section 66(1) of the Indian Income-tax Act, 1922. The assessment year with which we are concerned is 1952-53. The question referred reads as follows: "Whether, on the facts and circumstances of the case, the dividend income of Rs. 24,216 deemed to have been distributed to the…

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