Judgment

HIDAYATULLAH, J.: The High Court of Madras in a Reference under S. 66 (i) of the Indian Income Tax Act, answered in the negative the following question :

"Whether there was material for the Appellate Tribunal to hold that the income arising to Mrs. C. M. Kothari and Mrs. D. C. Kothari from the property arose indirectly out of the assets transferred indirectly by their husbands so as to attract the provisions of S. 16 (3) (a) (iii)."

In our opinion, these appeals by the Commissioner of Income-tax, Madras must be allowed.

2. Messrs. Kothari and Sons is a firm of stock brokers. In 1947, the firm consisted of C. M. Kothari and his two sons, D. C. Kothari and H. C. Kothari. Their respective shares were 6 : 5 : 5. On October 7, 1947, the firm entered into an agreement for the purchase of a house in Sterling Road, Madras, for Rs. 90,000, and the same day paid an advance of Rs. 5,000. This sum was debited in the books of the firm to the accounts of the three partners as follows :-

C. M. Kothari Rs. 1,800

D. C. Kothari Rs. 1,600

H. C. Kothari Rs. 1,600

Total : Rs. 5,000

3. The transaction was completed on October, 24, 1947. The sale deed, however, was taken in the names of Mrs. C. M. Ko