JUDGMENT

K. C. Agrawal, J. - Smt. Laxmi Nigam, the respondent in this appeal (hereinafter referred to as "the assessee") is the wife of Sri C. M. Nigam, I.A.S. They had three minor children in the relevant assessment year 1964-65 of which the relevant previous year is the financial year ending on 31-3-1964. Out of these children two were sons whereas the third one was a daughter. They were Aditya Mohan Nigam, aged about 13 years, Km. Priti Nigam and Arvind Kumar Nigam aged about 3 years & 4 months. In the assessment proceedings of the year 1964-65 Smt. Laxmi Devi Nigam claimed that out of love and affection she gifted on 21-3-1963 the half portion of her house Kiran Kunj, Gokhale Marg, Lucknow to her minor sons. Sri Aditya Mohan Nigam and Sri Arvind Mohan Nigam, and therefore, her income from the property was only half and that alone was includible in her income. The Income Tax Officer did not accept the case of the assessee and held that income from the property transferred by the assessee in favour of her sons, was liable to be included in her income u/s 64 of the Income Tax Act, 1961. On this view, the Income Tax Officer assessed the income of the whole house mentioned above in her hands. The assessee preferred an appeal before the Appellate Assistant Commissioner. Before the Appellate Assistant Commissioner the assessee pointed out that her husband Sri C. M. Nigam was the owner of a house; known as Kalpana at Lucknow. By a deed of agreement dated 20.3.1963 executed by C. M. Nigam in favour of the assessee, he agreed to make a gift of the aforesaid house in her favour, in lieu whereof she undertook the responsibility upon herself for maintaining and educating the said three children. It was further pleaded that Sri C. M. Nigam was anxious for being assured that after the gift deed of his house was made in favour of the assessee, she would discharge her obligation of maintaining the children faithfully, therefore, by another deed of agreement dated 20-3-1963 the assessee agreed to execute another gift of half share of her house Kiran Kunj in favour of her two minor sons. In pursuance of these agreements the registered gift deeds were executed on 21-3-1963; one by C. M. Nigam in favour of the assessee donating his house Kalpana in her favour the other by the assessee giving half share in Kiran Kunj to her minor sons. The assessee contended before the Appellate Assistant Commissioner that as the Income Tax Department had accepted the transfer made by C. M. Nigam in favour of the assessee, therefore, the transfer of the assessee should also be held to have been made for adequate consideration. The appellate Assistant Commissioner accepted the case of the assessee and holding that inclusion of half of the income from the property in question was not justified in the hands of the assessee, directing the same to be separately assessee as the income derived by the minors for their benefit out of their property.

2. Feeling aggrieved, the department filed a second appeal before the Income Tax Appellate Tribunal, Allahabad. The Income Tax Appellate Tribunal found the two sets of documents, one set executed on 20-3-1963 and the other set executed on 31-3-1963, spelt out director transfer of assets for adequate consideration and not indirect transfer of assets without adequate consideration. As these transactions in the opinion of the Tribunal were direct transfer of assets for adequate consideration the provisions of section 64(iii) and section 64(iv) were not attracted. The Tribunal, accordingly, found that the appeal of the department had no substance hence dismissed the same.

3. In this state of facts at the instance of the department the Tribunal referred the following question to the High Court for its opinion :-

"Whether on the facts and in the circumstances of the case the Tribunal was right in holding that income from half share of the house property names Kiran Kunj could not be included in the income of the Assessee u/s 64, of th