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Commissioner of Income-tax Vs. Mrs. Ayodhyakumari - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtRajasthan High Court
Decided On
Case NumberD.B. Civil Income-tax Reference No. 29 of 1971
Judge
Reported in(1985)46CTR(Raj)272; [1985]154ITR604(Raj)
ActsIncome Tax Act, 1961 - Sections 27, 27(1), 64 and 147
AppellantCommissioner of Income-tax
RespondentMrs. Ayodhyakumari
Appellant Advocate J.P. Joshi, Adv.
Respondent Advocate H.P. Gupta and; S.K. Gupta, Advs.
Cases ReferredKantamani Venkata Narayana & Sows v. First Addl.
Excerpt:
- - 8. two pre-requisite conditions are necessary for exercising jurisdiction under clause (a) of section 147 of the act :(i) the ito must have reason to believe that income has escaped assessment, and (ii) that he must have reason to believe that such escapement is by reason of the omission or failure on the part of the assessee or to disclose fully and truly all material facts necessary for his assessment for the relevant year. two conditions precedent which are to be satisfied before the ito can take action under clause (b) of section 147 are :(i) he should have reason to believe that income has escaped assessment, and (ii) it should be in consequence of information received after the original assessment that he should have reason so to believe. 9. if either condition is not.....mal lodha, j.1. this is a preference under section 256(1) of the i.t. act, 1961 (no. xliii of 1961) (for short 'the act' herein), by the income-tax appellate tribunal, delhi bench 'a', which for the sake of brevity hereinafter will be referred to as the 'the tribunal'. the tribunal has referred the following questions of law for decision of this court : '(1) whether, on the facts and in the circumstances of the case, the tribunal was right in holding that the appellate assistant commissioner was wrong is legalising the assessments for the assessment years 1962-63, 1963-64 and 1964-65, respectively, by converting the provisions of section 147(a) into those of section 147(b) of the act of 1961 (2) whether, on the facts and in the circumstances of the case, the tribunal was right in holding.....
Judgment:

Mal Lodha, J.

1. This is a preference under Section 256(1) of the I.T. Act, 1961 (No. XLIII of 1961) (for short 'the Act' herein), by the Income-tax Appellate Tribunal, Delhi Bench 'A', which for the sake of brevity hereinafter will be referred to as the 'the Tribunal'. The Tribunal has referred the following questions of law for decision of this court :

'(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the Appellate Assistant Commissioner was wrong is legalising the assessments for the assessment years 1962-63, 1963-64 and 1964-65, respectively, by converting the provisions of Section 147(a) into those of Section 147(b) of the Act of 1961

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that in respect of the assessment years 1965-66 and 1966-67, the provisions of Section 27(1) read with Section 64(iv) of the Income-tax Act, 1961, did not apply to the transfer of property made by the assessee

(3) Whether, on the facts and in the circumstances of the case, the expression 'an individual' occurring in Section 64(iv) of the Income-tax Act, 1961, would include a female

(4) Whether the Tribunal was right in holding that the provisions of Section 64(iv) of the Income-tax Act, 1961, are retrospective in character so as to include the income of the minors (other than house property) in respect of transfer made prior to April 1, 1961

(5) Whether, on the facts and in the circumstances of the case, the Tribunal was right in not giving a direction that credit be given for tax paid by the minors for the assessment years 1962-63 to 1966-67 ?'

2. The assessee, Mrs. Ayodhya Kumari, transferred her house property on March 31, 1956. She transferred a fixed deposit of Rs. 5,000 with the National Motors on December 29, 1956. She also transferred ten shares of City Light Theatres (P.) Ltd., on August 24, 1960, to her minor son, Sunil Kumar. One the same day, i.e., August 24, 1960, she transferred seventeen shares of City Light Theatres (P.) Ltd. to her minor son, Akhil Kumar. The incomes of these minor sons were not included in the total income of the assessee in her original assessments as according to the interpretation put by the Supreme Court on Section 16(3) of the Indian I.T. Act, 1922 (No. XI of 1922) (for short 'the old Act'), that 'an individual' occurring in Section 16 of the old Act would only include male species and not female species. According to the Income-tax Officer (ITO), there were changes in the provisions of Section 64 of the Act and according to Section 64(iv) of the Act, income of of the minor sons was to be included in the assessee's assessment. The ITO started proceedings against the assessee under Section 147(a) of the Act in respect of the assessment years 1962-63, 1963-64 and 1964-65, and he included the income of the minor sons in the total income of the assessee. He also included the income of the minor sons from the assets transferred by her to them in the assessment of the assessee for the assessment years 1965-66 and 1966-67. The assessee preferred appeals. The Appellate Assistant Commissioner (AAC) held that, on the facts of the case, he can substitute application of the provisions of Section 147(b) for Section 147(a) of the Act. He further held that though the assets had been transferred by the assessee prior to the commencement of the Act, still the provisions of Section 64 of the Act were applicable to the case, for, the Act is not concerned with the date of transfer but with the income arising out of transfer and chargeable to income-taxand that Section 64(iv) of the Act is wide enough to include income derived by transfer before the passing of the Act. The assessee filed second appeals before the Tribunal. The five appeals were disposed of by a common order dated June 25, 1979. The appeals related to the assessment years 1962-63, 1963-64, 1964-65, 1965-66 and 1966-67. The three appeals relating to 1962-63, 1963-64 and 1964-65 arose out of the initiation of proceedings under Section 147(a) of the Act as the ITO included the income of the minor sons in the total income of the assessee. The remaining two appeals were in respect of the assessment years 1965-66 and 1966-67, in which the income of the minor sons from the assets transferred by the assessee to them were included. The Tribunal has summarised its conclusions as follows :

'(a) Assessments for the years 1962-63, 1963-64 and 1964-65 could not be sustained because the Income-tax Officer wrongly applied the provisions of Section 147(a) to the facts of the case and the Appellate Assistant Commissioner was not competent to invoke the provisions of Section 147(b) of the Act to legalise the assessments for these three years.

(b) Though the assessee is a female, yet, in view of the charging Sections 4 and 5 read with Sections 60 to 64 along with the Explanation thereto, income from fixed deposits and income from shares earned by the minor sons are to be included in the total income of the assessee for the assessment years 1965-66 and 1966-67.

(c) Income from property which beloged to the minor sons cannot be clubbed with the income of the assessee in view of the provisions of Section 27 read with Section 64 of the Act.'

3. Five applications were filed by the Commissioner of Income-tax (CIT) requiring the Tribunal to refer the questions of law arising out of its orders dated June 25, 1970. It has referred the above mentioned questions for answer to this court.

4. Learned counsel for the respondents filed typed copies of the notice dated May 1, 1965, in respect of the assessment years 1962-63, 1963-64 and 1964-65, and also typed copies of replies to the notice dated May 1, 1965. Learned counsel for the Revenue stated that he has no objection if typed copies of notice dated May 1, 1965, relating to the aforesaid three assessment years are taken into consideration, for, it is clear from the statement of the case that the proceedings were initiated under Section 147(a) of the Act. He, however, objected regarding replies being taken into consideration while answering the questions referred to above.

5. We heard Mr. J.P. Joshi for the Revenue and Mr. H.P. Gupta and Mr. S.K. Gupta for the assessee-respondent.

6. We proceed to answer the questions at seriatim.

7. Question No. 1: The AAC in his order dated September 18, 1968, passed in the appeals relating to the assessment years 1962-63, 1963-64 and 1964-65, came to the conclusion that Section 147(a) did not apply and that the initiation of the proceedings against the assessee could be under Section 147(b) of the Act. The Tribunal was, however, of the view that the AAC was not right in legalising the assessments by resorting to the provisions of Section 147(b). In other words, according to the Tribunal, the proceedings initiated under Section 147(a) could not be legalised by converting them into that of Section 147(b) of the Act.

8. Two pre-requisite conditions are necessary for exercising jurisdiction under Clause (a) of Section 147 of the Act : (i) the ITO must have reason to believe that income has escaped assessment, and (ii) that he must have reason to believe that such escapement is by reason of the omission or failure on the part of the assessee or to disclose fully and truly all material facts necessary for his assessment for the relevant year. Two conditions precedent which are to be satisfied before the ITO can take action under Clause (b) of Section 147 are :

(i) he should have reason to believe that income has escaped assessment, and

(ii) it should be in consequence of information received after the original assessment that he should have reason so to believe.

9. If either condition is not satisfied, the ITO's action would be without jurisdiction.

10. Section 143 of the Act merely provides for issue of notice where income has escaped assessment. Issue of notice under Section 148 is a condition precedent to the validity of assessment under Section 147. Section 149 of the Act provides four periods of limitation from the end of the relevant assessment year within which a notice under Section 148 should be issued. It is not necessary that the notice under Section 148 calling for a return should specify the item of income which has escaped assessment or sourse of such income or indicate whether it issued under Clause (a) or Clause (b) of Section 147. In this connection, reference may be made to Kantamani Venkata Narayana & Sows v. First Addl. ITO : [1967]63ITR638(SC) . Section 34 and its first proviso of the old Acthas been replaced by Section 147, Section 148, Section 149(1) and Section 151 of the Act. So also Section 34(1), second proviso, Section 34(1), third proviso, and Section 34(1), Explanation, have now been replaced by Section 149(3), Section 152(1) and Section 147, Expl. 2, of the Act respectively. Having noticed the relevant provisions of the Act, we proceed to notice the case law bearing on this question.

11. Learned counsel for the Revenue as well as of the assessee have referred to various decisions mentioned hereinbelow in support of their respectivesubmissions. While considering Section 34(1) of the old Act, it was observed in Mukherjee v. CIT : [1956]30ITR535(Cal) as follows (p. 546):

' The statute does not prescribe any form in which the notice contemplated by Section 34 should be issued. The principal fact in both Clause (a) and Clause (b) of Section 34(1) is that income has escaped assessment for any year or has been under-assessed or assessed at too low a rate. That fact is common to both the clauses. The difference between the two clauses is that Clause (a) contemplates a case where the assessment or under-assessment was caused by an omission or failure on the part of the assessee to do certain things and Clause (b) contemplates a case where such escape from assessment or under-assessment occurred in spite of there having been no such omission or failure. The practical consequence of the presence of such omission or failure in one case and the absence thereof in the other is that, in the first case, the period within which the notice contemplated by the section can be issued is longer. I do not see how that difference makes it necessary or imperative that the notice itself must specify under which of the two clauses of the section it is being issued. All that the section itself says is that the Income-tax Officer may 'serve on the assessee...... a notice under Sub-section (2) of Section 22.'

The main notice to be issued is, therefore, a notice under Section 22(2) of the Act and Section 34 only authorises the issue of such a notice in spite of there having been a previous assessment or in spite of the time for the issue of a notice in the normal way having expired. It is true that when answering a notice issued under the section, the assessee may take a plea of limitation and for the purposes of such a plea, it may be necessary for him to know whether his case is being treated as one under Clause (a) or as one under Clause (b). It appears to me, however, that whether the case is treated as coming under one clause or the other will transpire in the course of the assessment proceedings and it is neither required of the Income-tax Officer, nor is it necessary, that he should specify the clause in the notice itself. Even when a clause is specified, it is conceivable that when making the actual assessment, the Income-tax Officer may come to hold that it comes under the other clause. Suppose a notice issued under the section specifies Clause (a) on the basis of a belief of the Income-tax Officer that the assessee has omitted or failed to disclose fully and truly all material facts. To recall an illustration, I gave in the course of the argument, an assessee may have a relative living in a distant country who may die leaving to the assessee under his will a house property situated within the taxable territories. The Income-tax Officer may come to know of the legacy and if he finds that the income from that property was not included in the return, he may issue a notice under Section 34 and let meassume that he specifies in the notice Clause (a) as the clause under which it is being issued. It is quite possible that, when appearing before him in compliance with such a notice, the assessee may satisfy the Income-tax Officer that he was totally unaware that any legacy had been left to him by his relative and he could not possibly have disclosed an income accruing to him of which he did not know. The Income-tax Officer may well accept that explanation. Can it be said that in such a case as that, if the explanation is accepted, the Income-tax Officer will be prevented from making an assessment on the basis that the case comes under Clause (b) of Section 34(1) provided he is within time for the purposes of that clause Whether or not there had been an omission or failure to disclose the income, the fact that the income had escaped assessment will remain and if income which ought to have been assessed is discovered as having remained unassessed, that will be a sufficient ground for proceeding to its assessment, provided, however, the period of limitatian has not already expired. I am giving that illustration only for the purpose of pointing out that the Income-tax Officer cannot possibly be tied down to the section or the clause which he mentioned in the notice and if he be free to make an assessment, provided there is some escaped or under-assessed income and provided that the time for making an assessment has not run out, it cannot be essential for the validity of a notice that a particular clause of Section 34(1) should be specified.'

12. It was held in Pulavarthi Viswanadham v. C1T : [1963]50ITR463(AP) that once an assessment is validly reopened under Section 34(1), no distinction can be made between the items falling under Clause (a) of that sub-section and those falling within the pale of Clause (b) and that the position obtaining after invoking Section 34(1)(a) is the same and as it was prior to the completion of the original assessment and the ITO would have jurisdiction to assess items falling under Section 34(1)(b) of the old Act. In Raghubar Dayal Ram Kishan v. CIT : [1967]63ITR572(All) there was a difference of opinion between Desai C.J. and Manchanda J. on the question that if an ITO assesses an income under Section 34(1)(a) and the Tribunal on appeal comes to the conclusion that it should have been assessed under Section 34(1)(b) and maintains it as such R.S. Pathak J., as he then was, while agreeing with Desai C.J., opined that where an ITO assessed an income under Section 34(1)(a) and the Appellate Tribunal on appeal comes to the conclusion that it should have been assessed under Section 34(1)(b), the Tribunal has no jurisdiction to convert or alter the assessment made by the ITO under Section 34(1)(a) to an assessment under Section 34(1)(b) and maintain it as such. The principle laid down therein was that Clauses (a) and (b) of Section 34(1) of the old Act contemplate two distinct and mutually independent jurisdictions. Before the Supreme Court in Johri Lal (HUF) v. CIT : [1973]88ITR439(SC) a question arose where the ITO himself proceeds on the basis of Section 34(1)(b) and not on the basis of Section 34(1)(a) of the old Act, in the absence of material on record to show that the ITO had formed the requisite belief, recorded his reasons for taking action under Section 34(1)(a) and obtained the sanction of the Central Board or the Commissioner, as the case may be, it is not open to the Appellate Tribunal to justify the proceedings taken by the ITO under Section 34(1)(a). In that case, the ITO proceeded on the basis of Section 34(1)(b) and the question was whether he can justify proceedings under Section 34(1)(a) of the Act. In Mriganka Mohan Sur v. CIT : [1974]95ITR503(Cal) reassessment was made under Section 34(1)(a) of the old Act. It was set aside by the Tribunal. The question arose whether the Tribunal could treat it as one made under Section 34(1)(b) of the old Act. Sabyasachi Mukharji J., as he then was, with whom Hazra J. agreed, ruled that where a reassessment has been made under Section 34(1)(a) of the old Act and is set aside by the Appellate Tribunal, it is open to the Tribunal to treat the reassessment as one properly made under Section 34(1)(b) provided that on the material on record all the necessary conditions under Section 34(1)(b) are satisfied. In that case, Mukherjee's case : [1956]30ITR535(Cal) Raghubar Dayal's case : [1967]63ITR572(All) and Johrilal's case : [1973]88ITR439(SC) were noticed.

13. The learned judges agreed with the view taken by Manchanda J., in Raghubar Dayal's case : [1967]63ITR572(All) . A Division Bench of the Calcutta High Court consisting of A.N. Sen J., as he then was, and R.N. Pyne J. in Bhupatrai Hirachand v. CIT : [1977]109ITR97(Cal) held that the jurisdiction and power of the ITO to reopen the assessment already made can be exercised by him only if the necessary conditions laid down in Clause (a) or Clause (b) of Section 34(1) of the old Act were satisfied and if the necessary conditions laid down in either of the sub-sections are satisfied, the exercise of jurisdiction and power by the ITO will be valid and lawful. It was observed as under (p. 114 of 109 ITR) :

'......we hold that the Tribunal was competent to deal with the pointand was justified in upholding the assessment under Section 34(1)(b) of the Indian Income-tax Act, 1922.'

14. Mriganka Mohan Sur's case : [1974]95ITR503(Cal) was followed and Johrilal's case : [1973]88ITR439(SC) was distinguished.

15. Section 147 of the Act deals with reassessment. Section 147 empowers the ITO to assess income which escaped assessment in the relevant year, on the fulfilment of the requisite conditions laid down under Clause (a) or Clause (b) of Section 147. It is not necessary for the ITO to specify in the notice which is issued under Section 147 of the Act that whether he is issuing under Clause (a) or Clause (b) of Section 147. Section 147 empowers the ITO toreopen an assessment already made. That jurisdiction and power can be exercised by him if the necessary conditions laid down in Clause (a) or Clause (b) of Section 147 are satisfied. The jurisdiction and power cannot be questioned if the conditions laid down in either of the two clauses are satisfied. In the case on hand, the ITO initiated proceedings under Section 147(a) of the Act. The AAC was of the view that the reassessment can be made in Clause (b) of Section 147 as the conditions laid down in it are satisfied. While respectfully following Mriganka Mohan Sur's case : [1974]95ITR503(Cal) and Bhupatrai's case : [1977]109ITR97(Cal) we are of the opinion that the Tribunal was not right in holding that the AAC was wrong in legalising the assessment by converting the provisions of Section 147(a) into Section 147(b) of the Act. We, therefore, answer the first question in the negative, in favour of the Revenue and against the assessee. Question No. 2 :

16. The Tribunal found that the provisions of Section 27(1) read with Section 64(iv) of the Act generally apply to the transfer of property made by the assessee in respect of the assessment years 1965-66 and 1966-67. In order to judge the correctness of this finding, it is necessary to notice the relevant provisions of the Act. Section 27 occurs in Chap. IV which deals with computation of total income. Section 27 contains definitions for the purpose of assessment under the head 'Income from house property'. Section 27 is for the purposes of Sections 22 to 26. Section 27(1) of the Act is as under :

'27. For the purposes of Sections 22 to 26--

(1) An individual who transfers otherwise than for adequate consideration any house property to his or her spouse, not being a transfer in connection with an agreement to live apart, or to a minor child not being a married daughter shall be deemed to be the owner of the house property so transferred ;......'

17. Section 63 defines transfer and revocable transfer. Section 63 is also for the purposes of Sections 60, 61 and 62 of the Act. According to Section 63(b) 'transfer' includes any settlement, trust, covenant, agreement or arrangement. Section 63 occurs in Chap. V of the Act. The object of this section is to defeat an individual's attempt to avoid or reduce incidence of tax by transferring assets, inter alia, to a minor child. It is also well settled that as this section creates an artificial liability to tax, it should be strictly construed. The material part of Section 64 as in force at the relevant time reads as under :

'64. In computing the total income of any individual, there shall be included all such income as arises directly or indirectly--.........

(iv) subject to the provisions of Clause (i) of Section 27, to a minor child, not being a married daughter of such individual, from assetstransferred directly or indirectly to the minor child by such individual otherwise than for adequate consideration ; and...

Explanation.--For the purpose of Clause (i), the individual in computing whose total income the income referred to in that clause is to be included shall be the husband or wife whose total income (excluding the income referred to in that clause) is greater ; and, for the purpose of Clause (ii), where both the parents are members of the firm in which the minor child is a partner, the income of the minor child from the partnership shall be included in the income of that parent whose total income (excluding the income referred to in that clause) is greater ; and where any such income is once included in the total income of either spouse or parent, any such income arising in any succeeding year shall not be included in the total income of the other spouse or parent unless the Income-tax Officer is satisfied, after giving that spouse or parent an opportunity of being heard, that it is necessary so to do.'

18. Reference has been made to Section 27(1) in Clause (iv) of Section 64(iv). Section 27(1) is overriding. It means that where property is transferred otherwise than for an adequate consideration to a minor child not being a married daughter, the individual is deemed under Section 27(1) to be the owner of the house property so transferred. Section 27 is a deeming provision and on the basis of that, a person becomes the owner of the house property. It deals with the vested right of a person and, as such, it is a substantive provision. According to it, the property vested in the wife or minor children would be considered to be the property owned by the husband or the father or the mother, as the case may be. The rights and liabilities of the wife or minor children are taken away and they become that of the husband or the parents, as the case may be. Since it is a deeming provision, the assessee could not be considered to be the owner of the property prior to the assessment year 1962-63. As stated above, Section 27 overrides Section 64 of the Act so far as inclusion of house property income is concerned and so the disputed income could not be included in the total income of the assessee under Section 64 of the Act. It, therefore, follows that the Tribunal was right in holding that in regard to the assessment years 1965-66 and 1966-67, the provisions of Section 27(1) read with Section 64(iv) do not apply to the transfer of property made by the assessee. Question No. 3 :

The expression 'such individual' has been used in Section 64(iv) of the Act and the question is whether this expression includes a 'female'. The Tribunal has held that such individual in the circumstances of the case would include mother as the property has been transferred by the mother to the minor sons. The word 'individual' in Sub-clause (a)(ii) of Section 16(3) ofthe Indian I.T. Act, 1922, was interpreted to mean only the male and not the female of the species. This was so held by the Supreme Court in CIT v. Sodra Devi [1951] 32 ITR 615. The words used in Section 64 of the Act abundantly make it clear that the word 'individual' there means both male and female of the species. It was held in Smt. Priti Lata Samanta v. CIT : [1971]79ITR18(All) by the Allahabad High Court that the wordings of Section 64 of the Act make it abundantly clear that the word 'individual' as used in the main clause of Section 64 is competent to cover males and females of the species. Reference may also be made to Smt. Nripendra Kumari Bhandari v. CIT : [1976]105ITR158(Mad) . In the Explanation appended to Section 64, the expressions 'individual' and 'parents' have been used. Section 4 of the Act is a charging one and Section 5 provides for scope of total income. Both these Sections, Sections 4 and 5 are charging sections. So having regard to Sections 4 and 5 and the provisions of Section 64 which occur in Chapter V which deals with income of the individual to include income of minor child, etc., we are of the opinion that the word 'individual' includes a 'female' and in this case it is the mother who has transferred the property to her minor sons. The Tribunal was, therefore, right in holding that the expression 'individual' in Section 64(iv) of the Act includes a 'female'.

Question No. 4 :

19. The Tribunal found that Section 64(iv) of the Act is retrospective and so the income of the minor from assets other than house property in respect of transfers effected prior to April 1, 1961, could be included. The principal reason given by the Tribunal is that this cannot be so in the context of Section 60 of the Act. Section 60 of the Act applies to transfers whether effected before or after the commencement of the Act. The expression 'whether effected before or after the commencement of the Act' makes it abundantly clear that Section 60 is retrospective. Section 64, of course, occurs in Chapter V. Section 64(1) is not concerned whatsoever with the date of the transfer of the assets. It is clear that the provisions contained in Section 64(1) have application to income arising during the relevant previous year from assets irrespective of whether the transferred assets came to be transferred before the relevant assessment year.

20. In Govinddas v. ITO : [1976]103ITR123(SC) it was held that it is a well-settled rule of interpretation that unless the terms of a statute expressly so provide or necessarily require it, retrospective operation should not be given to a statute so as to take away or impair an existing right or create a new obligation or impose a new liability otherwise than as regards matters of procedure. It was further held that if an enactment is expressed in a language which is fairly capable of either interpretation, it should be construed as prospective only. The Tribunal held that it cannotbe held that Section 64 is retrospective in character divorced from the context of Section 60, Unlike Section 60, the expression 'whether effected before or after the commencement of this Act' does not find mention in Section 64. There is nothing in Section 64(iv) to show that the provisions are retrospective. All laws are considered to be prospective except made retrospective by express words or by necessary intendment. It cannot be said that Section 64(iv) is retrospective. It is prospective only. The Tribunal was not right in holding that the provisions of Section 64(iv) are retrospective in character so as to include the income of the minors (other than from house property) in respect of transfers prior to April 1, 1961.

Question No. 5 :

21. It is not necessary to answer this question, for, the Tribunal has to pass appropriate orders as are necessary to dispose of the case in conformity with the answers given to questions. Nos. 1 to 4.

22. We, therefore, answer questions Nos. 1 and 4 in the negative, i.e., in favour of the Revenue and against the assessee. Questions Nos. 2 and 3 are answered in the affirmative, in favour of the assessee and against the Revenue. It is not necessary to answer question No. 5.

23. In the circumstances of the case, we leave the parties to bear their own costs.

24. Let the answers be returned to the Tribunal as required by Section 260(1) of the Act.

D.B. Civil Income-tax Reference No. 29 of 1975--7-12-1984.The Income-tax Appellate Tribunal, Jaipur Bench, has referred the following questions for our answer :

'(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that in respect of assessments for the years 1967-68, 1968-69 and 1970-71, the provisions of Section 27(1) read with Section 64(iv) of the Income-tax Act, 1961, did not apply to the transfer of property made by the assessee

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the provisions of Section 64(iv) of the Income-tax Act, 1961, are retrospective in character so as to include the income of the minors (other than from house property) in respect of transfers made prior to April 1, 1961

(3) Whether, on the facts and in the circumstances of the case, the expression 'an individual' occurring in Section 64(iv) of the Income-tax Act, 1961, would include a female ?'

25. The learned counsel for the parties state that the aforesaid questions Nos. 1, 2 and 3 in this reference are identical with questions Nos. 2, 4 and3, respectively, which were referred by the Tribunal in CIT v. Smt. Ayodhya Kumari (D.B.C.I. Reference No. 29 of 1971 decided on February 3, 1984) arid, therefore, the aforesaid three questions may be answered in accordance with that decision.

26. It may be stated that for question No. 2 in Ayodhya Kumari's case it was held that the Tribunal was right in holding that in regard to the assessment years 1965-66 and 1966-67, the provisions of Section 27(1) read with Section 64(iv) of the I.T. Act, 1961, do not apply to the transfer of property made by the assessee. While deciding question No. 4, it was held that the Tribunal was not right in holding that the provisions of Section 64(iv) are retrospective in character so as to include the income of the minors (other than from house property) in respect of transfers made prior to April 1, 1961. In connection with question No. 3, it was held that the Tribunal was right in holding that the expression 'indvidual' in Section 64(iv) of the Act includes 'female'. In view of the aforesaid findings, questions Nos. 2 and 3 were answered in the affirmative, i.e., in favour of the assessee and against the Revenue. Question No. 4 was answered in the negative, i.e., in favour of the Revenue and against the assessee. Adopting the reasons given in Ayodhya Kumari's case which is between the same parties, we answer questions Nos. 1 and 3 in the affirmative, i.e., in favour of the assessee and against the Revenue. Question No. 2 is answered in the negative, i.e., in favour of the Revenue and against the assessee. In the circumstances of the case, we leave the parties to bear their own costs.

27. Let the answers be returned to the Tribunal as required by Section 260(1) of the Act.


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