The provisions of Sec.16(3) of the Income-tax Act, 1961 create an artificial liability to tax and that the provisions must be strictly and literally construed.

1. This is a reference under Sec. 66(1) of the Income-tax Act. The question referred is "whether in the facts and circumstances of the case, the clubbing of the income of Shrimati Mohanvati Mehra in the hands of her husband was valid in law?". The facts of the case are not in dispute and may be briefly narrated.

2. H.C. Mehra, the assessee, and his son, Davindra Mehra, along with others, were partners in the firm called M/s. D. V. Varinder. On the death of Davindra Mehra, unmarried and intestate, on the 2nd May, 1956, his mother, Shrimati Mohanvati Mehra, and wife of the assessee, succeeded to her sons interest in the partnership and, the partnership deed providing for the continuation of the firm without dissolution on the death of any one of the partners, she became a partner in the firm in which her husband was one of the partners. During the accounting period ending with the 31st December, 1957, the share of the profit of the assessee in the said firm was determined at Rs. 32,116 only. The share of the profit of the assessees wife, namely, of Shrimati Mohanvati Mehra, in the said firm was computed at Rs. 21,194. The Income-tax Officer clubbed together the share of the profit of the assessee with that of the share of the profit of his wife in accordance with the provisions of Sec.16(3) (i) of the Income-tax Act (hereinafter referred to as "the Act") and computed the total taxable income of the assessee at Rs. 53,310 only and assessed him thereon accordingly. On appeal, the learned Appellate Assistant Commissioner agreed with the Income-tax Officer and held that, on the language of Sec.16(3) (a) (i) of the Act, the income received by the wife of the assessee from the aforesaid firm in which the assessee was himself a partner had rightly been included in computing the total income of the assessee for the purpose of assessment. The assessee, thereupon, took the matter in second appeal to the Income-tax Appellate Tribunal. Two points were urged on behalf of the assessee before the said Tribunal, viz., (i) that Sec.16(3) was repugnant to the provisions of the Hindu Succession Act, and (ii) that, in view of the fact that the wife of the assessee had stepped into the shoes of her deceased son by succeeding to his interest in the partnership had become a partner in her own right and the income in question was derived from the assets which belonged to her absolutely, the provisions of Sec.16(3) (a) (i) were not applicable to the facts of the present case. The Tribunal, however, rejected both these contentions and held that there was no ambiguity in the wordings of Sec.16(3) (a) (i) and that, in accordance with that section, the income of the wife, having directly arisen out of her membership in the firm in which her husband, namely, the assessee, was also a partner, had to be included in computing the total income of the assessee for the purpose of assessment. The assessee, thereupon, desired the Tribunal to refer to this Court the aforesaid two questions arising out of the order of the Tribunal. The Tribunal has, however, referred only one of the two questions as set out above and has declined to refer the question whether Sec.16(3) (a) (i) of the Act is ultra vires of the Hindu Succession Act.

3. It is quite clear that, in adopting the course which the Income-tax authorities have adopted in this case, they have relied on the express words of Sec.16(3) (a) (i) of the Act. That sub-section states that, in computing the total income of any individual for the purpose of assessment, so much of the income of a wife of such individual as arises directly or indirectly from the membership of the wife in a firm of which her husband is a partner, shall he included. All the ingredients of this sub-section are present in this case. The wife is a partner in the firm in which her husband is also a partner and the income earned by her directly arises out of her membership in the firm. Upon the ordinary and natural meaning of the words use