ACHAMMA GEORGE Vs. INSPECTING ASSISTANT COMMISSIONER

JUDGEMENT

(1.) Taxation of income in the hands of spouses, has generated interesting legal questions. Even when the income was earned exclusively by, or by the profit generating means owned by and at the command of, a person, he might endeavour to make it appear that the income or the income resources, belong to a different person. That would serve the purpose of escaping the tax burden. Human nature being what it is, there will be total loss if the person trusted in that behalf, abuses it. Such a tragic turn would not ordinarily happen, if the arrangement is with one near and dear. Perhaps, the nearest and dearest relationship is that which exists between the spouses.

(2.) Transfers of property, with a view to avoid tax, had been made, virtually on the eve of marriage so as to overreach statutory provision nullifying, for tax purposes, such transfers between spouses. Other subterfuges too have been employed, for dividing the income and to reduce the impact of the tax. Governments, when alert and dynamic, used to intervene to protect the interests of the Revenue, even by amendatory process in relation to the existing statutes found deficient in some way or other. The result is a race between the assessee and the Revenue, where each one plays the part carefully and calculatedly, swiftly and intelligently.

(3.) A tax question where the husband and wife were in receipt of income as partners of the same firm, arises in these writ petitions, in the setting of an assessment under Agricultural Income Tax Act, 1950.