TULSIDAS KILACHAND vs THE COMMISSIONER OF INCOME-TAX,BOMBAY CITY I.[And connecte

The Supreme Court held that under the Indian Income-tax Act, 1922, specifically sections 16(1)(c), 16(3)(a)(iii), and 16(3)(b), a declaration of trust by a husband in favor of his wife constitutes a transfer of shares, making the husband a trustee distinct from the transferor. The Court clarified that 'adequate consideration' does not include love and affection, thus affirming the applicability of section 16(3)(b) over the third proviso to section 16(1)(c). The appeal was dismissed, confirming the tax liability on the dividend income received by the wife from the trust.