COMMISSIONER OF INCOME TAX, CALCUTTA vs PRAHALADRAI AGARWALA

The Supreme Court held that for the application of Section 64(1)(iii) of the Income Tax Act, 1961, there must be a proximate connection between the income accrued and the assets transferred. The Court clarified that mere capital contribution by the wife does not automatically grant her partnership rights; rather, it is the agreement among partners that establishes her status. The High Court's ruling in favor of the assessee was upheld, confirming that the income from the wife's partnership share was not includible in the husband's total income.