HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Commissioner of Income-tax, Madras v. C.M. Kothari, Madras (deceased), through legal representative
Civil Appeals Nos. 34 to 36 of 1962
[1964] 2 SCR 531 ·
Indian Income-tax Act, 1922: section 16(3)(a)(iii)
Sources & disclosures includedDownload original judgment / order
3-judge bench; unanimous judgment delivered by M. Hidayatullah, J. · S. K. Das, J. · A. K. Sarkar, J. · M. Hidayatullah, J.
Assessment years: 1948-49, 1950-51, 1951-52
01 · Facts of the case
A father gifted Rs.30,000 to his daughter-in-law while his son made matching birthday and Diwali gifts to his mother. The two women then funded one-third shares in a house originally contracted for by the family firm. The Tribunal found indirect transfers, but the High Court answered against Revenue (SCR pp.531-535; PDF pp.1-5).
Source: Primary judgment: facts
02 · Discussion by the Hon’ble Court
“Indirectly” covered a chain in which assets changed hands through an intimately connected reciprocal arrangement. Technical consideration was unnecessary: matching amounts, timing, the unexplained gifts and exact funding of the wives' acquisitions showed one circuitous transaction designed to avoid clubbing (SCR pp.535-537; PDF pp.5-7).
Source: Primary judgment: discussion
03 · Judicial decision
The Court vacated the High Court's answer, answered the reference affirmatively and allowed Revenue's appeals with costs (SCR p.537; PDF p.7).
Source: Primary judgment: decision
04 · Outcome / in whose favour
In favour of Revenue: property income attributable to the wives' indirectly funded shares was clubbed with their husbands (SCR pp.536-537; PDF pp.6-7).
Source: Primary judgment: outcome
05 · AKHB REVIEW POINT
AKHB analysis: trace reciprocal transfers as a single economic chain when amounts, timing and purpose align. Do not extend this historical finding beyond its facts without checking current clubbing text and anti-avoidance law (based on SCR pp.535-537; PDF pp.5-7).
Source: Primary judgment: review point
Source & verification
Download original judgment / order · Open cited source rendition
Full 7-page SCR source asset read in page-preserving text and visually inspected; adjacent-report boundaries were checked.
- Exact source bytes, SHA-256 and seven-page count match catalogue asset 1964_2_531_537; every page was read and visually inspected.
- The source verifies the stated case identity, bench, statutory issue and operative order.
- No exact source-hash, asset-ID, SCR-citation, docket or same-judgment match was found in the published corpus or reviewed archive.
Statutory scope
The ruling construes the repealed 1922 Act's spouse-clubbing rule; current clubbing, transfer and anti-avoidance provisions were not checked.
Later treatment
Source checked 2026-10-11. Later judicial treatment and current statutory applicability have not been comprehensively checked; no current-law or citator clearance is represented.
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