Law:

Section:

Section 64 of the Income-tax Act, 1961 - Transfer of assets - For benefit of spouse - Assessment years 1983-84 to 1985-86 - Whether where assessee, a Muslim, makes a transfer of property in favour of his minor sons and property is fetching rental income, section 64(1)(v) shall apply and contention of assessee that it was for parents to educate their children and once transfer of property was made by parents in favour of their children, any income arising out of consequence of transfer of that property, should not be taxed in hands of assessee-transferor, cannot be accepted - Held, yes FACTS The assessee had gifted certain properties to his minor sons which was accepted by them. The assessee claimed that after gift, rental income from gifted property, should not be taxed in the hands of the assessee for the assessment years 1983-84 to 1985-86. The Assessing Officer charged that income in the hands of the assessee by invoking section 64(1)(v). That was confirmed by the Deputy Commissioner (Appeals) and the Tribunal. On reference, it was contended by the assessee, inter alia, that it was obligatory for the parents to educate their children and once the transfer of property was made by the parents in favour of their children, any income arising out of the consequence of transfer of that property, should not be taxed in the hands of the assessee-transferor. HELD Considering the facts that there was a transfer by the assessee to his sons without any consideration of money and that the property fetched the rental income, the Tribunal was justified in holding that the rental income from the said property should be taxed in the hands of the assessee under section 64(1)(v). If the type of consideration with which the assessee had come before the Assessing Officer was to be accepted, the object of the provision of section 64 would be frustrated. Therefore, no interference was called for with the order of the Tribunal. [Para 6] Mahendra Gargia and N. Jain for the Appellant. Parinitu Jain for the Respondent. JUDGMENT 1. On an application under section 256(1) of the Income-tax Act the Tribunal has referred the following question for the opinion of this Court :- "Whether on…

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