Tax for insurance commission

My father-in-law, who is into general insurance business, has taken an insurance agency in my wife's name [because I believe IRDA doesn't yet allow multiple agencies in the name of a single agent]. Father-in-law does business and my wife gets commission credited to her account after deduction of applicable TDS. We transfer this money to father-in-law's account. The amount credited to wife's account is now appearing in the form 26AS. My wife’s own income is below the taxable limit right now. Should the insurance commission be shown in wife's ITR? If so how? Is this a correct arrangement? What can we do to keep this arrangement within the legal framework so that the taxman doesn’t raise any objections?