TMI Blog1970 (2) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act) : " Whether the assessee is entitled to the claim of Rs. 977 as interest paid in the year 1960-61 and Rs. 1,148 in the assessment year 1961-62 in the circumstances narrated above ? " The circumstances that have been narrated by the Tribunal may now be stated : Naunihal and his two sons, Parshotam Singh and Iqbal Singh, constituted a registered firm. Naunihal had sufficient credit balance in his capital account and he issued instructions that the following sums be transferred to his daughter and daughters-in-law. Smt. Kamal Kumari is the daughter and Smt. Bimla Devi and Smt. Tripta Devi are daughters-in-law, the former being the wife of Parshotam Singh and the latter being the wife of Iqbal Singh. A sum of Rs. 9,500 was gifted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cient cash balance nor bank balance on the date of the alleged gifts to cover the amounts gifted. The order of the Income-tax Officer, on appeal, was affirmed by the Appellate Assistant Commissioner. The Tribunal, on further appeal, affirmed the decision of the Appellate Assistant Commissioner principally on the ground that the book transfers were of no consequence, inasmuch as the firm was not a firm of bankers. The assessee was dissatisfied with the order of the Tribunal regarding these two assessment years and applied under section 66(1) of the Act for reference of the question of law, arising from the order of the Tribunal, for opinion of this court. The Tribunal allowed this application ; and that is how the matter has been placed befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluded by the decision of this court in Balimal Nawal Kishore Commissioner of Income-tax, where on somewhat similar circumstances, this court took the view that from the mere fact that there were no cash balances, it could not be held that the gift would be invalid. The most significant fact is that there is no attack by the department that the gift was a sham transaction. The only ground, on which the Tribunal proceeded to hold that the gift was not valid was that there were no cash balances and that there was neither any proof of acceptance of these gifts by the donees. I was a party to the decision in Balimal Nawal Kishore's case ; and the judgment in this case was rendered by Falshaw C.J. The facts of this case were : " There were f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed to deduct the sums paid as interest to the donees for the relevant period, but this was disallowed by the Income-tax Officer, the Appellate Assistant Commissioner and finally by the Appellate Tribunal which held that the gift was not valid because it did not comply with the provisions of section 123 of the Transfer of Property Act on the grounds that there was neither physical nor symbolic delivery and the cash available to the firm, on the date of the gift was insufficient to satisfy the gift of Rs. 60,000. " The question of la we that was referred by the Tribunal in the aforesaid case was as follows : " Whether, there was a valid gift of Rs. 60,000 on December 5, 1956, by merely transferring Rs. 60,000 from the capital account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valid gift. All that had happened was that mere credit and debit entries were made and there was no evidence like that in the present case that the gift had been acted upon. In fact, it was further found that on the day the gift was made, the assessee did not even have total credits to the tune of the amount gifted in his capital account. In fact, the amount gifted still continued to be invested in the business in the same manner as before and there was no evidence on record from which the acceptance of the gift either by the son or the guardian could be inferred. It may be mentioned that there would be no question of acceptance by a minor. Therefore, what had to be seen was the acceptance of the gift by the guardian of the minor. Thus, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there was enough compliance with the requirement of delivery necessary for effecting the transfer of the property by way of a gift. It is not necessary to go into those cases because, in our opinion, they are clearly distinguishable on facts. In each of those cases, there was ample evidence of a gift having been made and even acted upon. The only question that was agitated in those cases was whether the gifts must fail for non-compliance of the actual delivery of the movables. In the case before us, there is no evidence of the gift having been made or its having been acted upon." On the admitted facts, the conclusion is irresistible that there was acceptance of the gift. The only other question, that remains to be resolved, is the obje ..... X X X X Extracts X X X X X X X X Extracts X X X X
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