Case: Philip John Plasket Thomas Vs. Commissioner Of Income Tax Calcutta

wife or the word husband must not be taken in their primary sense which is clearly indicative of a marital relationship. Nor are we satisfied that the object of the legislature is just the principle of aggregation. We have said earlier that sub-sec. (3) of S. 16 clearly aims at foiling an individuals attempt to avoid or reduce the incidence of tax by transferring his assets to the wife or minor child or admitting his wife as a partner or admitting his minor child to the benefits of partnership, in a firm in which such individual is a partner. This object does not require that the word wife or the word husband should be interpreted in an archaic or secondary sense."11. Learned counsel for the respondent has drawn our attention to certain English decisions, particularly the decision of the House of Lords in Lord Vesteys Executors and Vestey v. Commissioners of Inland Revenue, (1949) 31 Tax Cas 1. One of the questions which was considered in that decision was whether for the purpose of either S. 18 of the Finance Act, 1936 (in England) or S. 38 of the Finance Act, 1938 (in England) "wife" included a "widow". Their Lordships had to consider the earlier decision of the Court of Appeal in Commissioners of Inland Revenue v. Gaunt, (1941) 24 Tax Cas 69 which held that the one word included the other. Their Lordships ultimately held, overruling the decision in Gaunts case, (1941) 24 Tax Cas 69 that the word "wife" did not include a "widow". The English decisions proceeded on the footing that in England it is a principle of Income-tax law, embodied in R. 16 of the General Rules, that for Income-tax purposes husband and wife living together are one. Lord Morton said :"I think that the treatment of husband and wife by the Legislature for Income-tax purposes rests on the view that any income enjoyed by one spouse is a benefit to the other spouse. It is not surprising, therefore, that in the Sections now under consideration a benefit to the wife of the settlor is treated as being a benefit to the settlor, but it seems to me unlikely that this principle is being extended by these Sections to the widow of the settlor."Now, it is quite clear to us that the treatment of husband and wife in the Indian Income-tax Act, 1922 does not rest on the view that any income enjoyed by one spouse is a benefit to the other spouse; for sub-sec. (3) of S. 16 makes it quite clear that all income enjoyed by the wife is not to be included in the income of the husband and only such of the wifes income as comes within the sub-section is to be included in the income of the husband. We therefore think that the English decisions are not in point and there are no reasons why the word wife or the word husband should not be given its true natural meaning.12. This brings us to the second question, namely, whether the transfer of shares made by the assessee in favour of Mrs. Judith Knight on December 10, 1947 was to take effect only from the date of their marriage. It is admitted that on December 10, 1947 the assessee and Mrs. Knight were not married. It is also admitted that they were engaged to be married and the engagement was announced on September 3, 1947. The transfer deed which we have earlier quoted contained no words of postponement. On the contrary, it contained words which indicated that the transfer took effect immediately. Learned counsel for the respondent has rightly pointed out that the expression in the transfer deed "in consideration of my forthcoming marriage" can have very little meaning as a real consideration, because on September 3, 1947 the parties had mutually promised to marry each other; therefore the promise to marry had been made earlier than December 10, 1947. Learned counsel for the respondent has argued before us that the transfer of shares was really a gift made to Mrs. Knight in contemplation of the forthcoming marriage and the gift was subject to a condition subsequent, namely, that of marriage which if not performed would put an end to the gift. This does not however advance the case of the respondent in any way. A gift may be made subject to conditions, either precedent or subsequent. A condition precedent is one to be performed before the gift takes effect; a condition subsequent is one to be performed after the gift had taken effect, and, if the condition is unfulfilled will put an end to the gift. But if the gift had already taken effect on December 10, 1947 and the condition subsequent has been later fulfilled, then the gift is effective as from December 10, 1947 when the assessee and Mrs. Knight were not husband and wife. That being the position, sub-cl. (iii) of S. 16 (3) (a) will not be attracted to the case as the transfer of the share was not made by the husband to his wife.13. We were also addressed on the question as to the circumstances in which a gift to an intended wife or husband may be recovered when the marriage does not take place through the fault of either of the two parties. We do not think that that question falls for decision in the present case. From whatever point of view we look at the transfer of shares in the present case, whether it be in consideration of a promise to marry or be a gift subject to the subsequent condition of marriage, the transfer takes effect immediately and is not postponed to the date of marriage. If that be the true position, as we hold it to be, then sub-cl. (iii) of S. 16(3) (a) is not attracted to those cases, apart altogether from any question as to whether there was adequate consideration for the transfer within the meaning of that sub-clause.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]Now, it is quite clear to us that the treatment of husband and wife in the Indian Income-tax Act, 1922 does not rest on the view that any income enjoyed by one spouse is a benefit to the other spouse; for sub-sec. (3) of S. 16 makes it quite clear that all income enjoyed by the wife is not to be included in the income of the husband and only such of the wifes income as comes within the sub-section is to be included in the income of the husband. We therefore think that the English decisions are not in point and there are no reasons why the word wife or the word husband should not be given its true natural meaning.We were also addressed on the question as to the circumstances in which a gift to an intended wife or husband may be recovered when the marriage does not take place through the fault of either of the two parties. We do not think that that question falls for decision in the present case. From whatever point of view we look at the transfer of shares in the present case, whether it be in consideration of a promise to marry or be a gift subject to the subsequent condition of marriage, the transfer takes effect immediately and is not postponed to the date of marriage. If that be the true position, as we hold it to be, then sub-cl. (iii) of S. 16(3) (a) is not attracted to those cases, apart altogether from any question as to whether there was adequate consideration for the transfer within the meaning of that sub-clause.