Kondaiah, J. -
(1.) AT the instance of the Commissioner of Wealth-tax, Andhra Pradesh, Hyderabad, the following common question of law arising out of the common order of the Income-tax Appellate Tribunal in the case of Shri Khan Saheb Dost Mohd. Alladin and his brother, Shri Noor Mohd. Alladin (hereinafter called " the assessees") has been referred under Section 27(1) of the Wealth-tax Act (hereinafter called "the Act") for the opinion of this court:
" Whether, on the facts and the circumstances of the case, the value of the properties transferred by the assessees to their wives is includible in the total wealth of the assessee under Section 4(1)(a) of the Wealth-tax Act ? "
(2.) IN order to appreciate the scope of the reference, it is necessary to state the material facts that gave rise to the aforesaid question: At the time of the marriage of each of the assessees, a sum of Rs. 10,000 was fixed as mehr (dower) as disclosed from the respective sianamas dated January 30, 1936, and 6th Aban 1339 Fasli, copies of which are annexures " A" and " B", respectively. On December 31, 1959, the assessees executed agreements marked as annexures "C" and "D" appended to the statement of the case with their wives, whereunder the dower of Rs. 10,000 originally fixed at the time of their marriages was enhanced to Rs. 2,00,000. The recitals of the agreements reveal that the agreements have been entered into by mutual consent of both the parties and the wives had accepted the enhancement of the dower and affixed their signatures to those agreements. Paragraph 3 of the agreements, which is material for our purpose, reads thus:
" The said mehr shall become due on dissolution of the marriage by death of either of the parties herein or otherwise in contingencies provided by law. It shall however be optional with the husband to pay and discharge the said mehr earlier at any time hereafter."
The enhanced dower was deemed to have been incorporated in the original marriage contract and the same became due and payable on the dissolution of the marriage of either of the parties or otherwise in the contingencies provided by law, although a provision has been inserted for payment of dower by the husband at any time he chose to do so. In pursuance of the aforesaid agreements, each of the assessees executed two sale deeds dated November 28, 1960, and October 15, 1961, transferring certain immovable properties specified therein, valued at Rs. 18,370 and Rs. 27,500 to his respective wife in part settlement of the dower debt.
The value of the properties transferred by the assessees in favour of their wives under the sale deed referred to earlier was not included by them in their wealth-tax returns for the assessment years 1962-63 to 1965-66. The contention of the assessees that the dower fixed at the time of the marriage and enhanced on 31st December, 1959, as per the agreements entered into by them with their wives was in the nature of a debt and it was open to them to pay the same at any time they choose and the transfer of properties was made in partial discharge of such debt and hence, they are not transfers without adequate consideration within the meaning of Section 4(1)(a) of the Act, did not find favour with the Wealth-tax Officer. The Wealth-tax Officer was of the view that although the Mohammadan law permits the husband to enhance the dower, there was no compulsion to enhance it and it was enhanced in the instant case purely out of his will and love and affection and it did not create a liability, nor did it amount to a consideration contemplated under Section 4 of the Act. In his opinion there was no antecedent liability or debt in discharge of which the transfer of property was made as the very right to pay the deferred debt would arise only on dissolution of marriage by divorce or on death of either of the parties. It was also observed that the assessees themselves had not claimed either the original dower of Rs. 10,000 or the enhanced dower of Rs. 2,00,000 as a liability in the wealth-tax assessments up to 1961-62. Hence, he added the value of the properties transferred by the assessees to their wives in order to arrive at their total wealth for the assessment years in question. The appeals preferred by the assessees to the Appellate Assistant Commissioner of Wealth-tax regarding the additions made by the Wealth-tax Officer in respect of the value of the properties transferred by them to their respective wives in partial discharge of their debt were not fruitful. Aggrieved by the decision of the Appellate Assistant Commissioner, the assessees preferred further appeals to the Income-tax Appellate Tribunal. The Tribunal was of the view that, under the Mohammadan law, mehr or dower, whether prompt or deferred, was in the nature of an unsecured debt and it was open to the husband to enhance the same at any time subsequent to the marriage, and in the case of a deferred dower, although the wife cannot demand payment until the marriage is dissolved either by the death of the husband or by divorce, it (dower) shall continue to be a debt so far as the husband is concerned and he can discharge the same at any time even before the dissolution of the marriage. The transfer of property by the husband to the wife in settlement of the dower debt was held to be a transfer for adequate consideration. Hence, it was held that the transfer of the properties by the assessees to their wives was in discharge of a portion of the enhanced dower debt for adequate consideration and the value of such properties need not be included in the net wealth of the assessees for the years in question and all the appeals preferred by the assessees were allowed by the respective common orders passed by it on September 23, 1967. Aggrieved by the decision of the Tribunal, the Commissioner of Wealth-tax has preferred the reference applications and the Tribunal has stated a case on the common question of law that arises out of its orders for opinion of this court.
(3.) SRI P. Rama Ran, the learned counsel for the revenue, contended that there was no debt due and payable by the assessees to their wives until the happening of a contingency, viz., the dissolution of marriage by death or divorce and even otherwise, there was no subsisting debt or legal obligation to discharge the same on the date of the alleged transfers and, hence, the transfer of the properties by the assessees to their wives is not a transfer supported by adequate consideration and the values of such properties are liable to be included in the assessees wealth under Section 4(1)(a) of the Act.
This claim of the department was resisted by Sri Anjaneyulu, the learned counsel appearing for the assessees, contending, inter alia, that the assessees are competent under their personal law to enhance the dower while the marriage is subsisting and the dower is an unsecured debt which is binding on the husband and is legally enforceable against him and it is an actionable claim capable of transfer by the wife.;