COMMISSIONER OF INCOME-TAX, MADRAS vs C.M. KOTHARI, MADRAS (DEAD), AND AFTER HIM HIS LEGAL

The Supreme Court held that under Section 16(3)(a)(iii) of the Indian Income-tax Act, 1922, the income of a wife can be included in the income of her husband if it arises from assets transferred to her by him, either directly or indirectly. The Court set aside the High Court's negative answer to the Tribunal's reference, affirming that the income of Mrs. C. M. Kothari and Mrs. D. C. Kothari was indeed derived from assets indirectly transferred by their husbands. The judgment emphasized that interconnected transfers intended to evade tax implications fall within the purview of the statute.