9911796707
TMI Blog1970 (2) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Smt. Kamal Kumari and Rs. 4,500 each to the two daughters-in-law. The method adopted was that these amounts were debited in the books of account of the registered firm and were credited in the names of these three ladies. On these credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion 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 before us. Before proceeding to deal with the various cases that have been cited at the Bar by the learned counsel for the assessee as well as by the learned counsel for the department, it will be proper to boldly state the facts that have been found an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 five partners in the firm, Nawal Kishore, his three sons, Jagan Nath, Deoki Nandan and Lal Chand, and also Atma Ram, who was apparently the natural son of Nawal Kishore, but was the adopted son of one Raje Lal. Nawal Kishore died on the 14th of December, 1956, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of L. Nawal Kishore to the account of donees as mentioned in paragraph 3(c) above, so that the interest of the various accounts comprises a proper deduction under section 10(2)(iii) of the Income-tax Act ? " This question of law was answered by this court in favo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave 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 is clear that in this case, the entire matter rested on book entries ; and if, in the present case also, the matter had rested only on book entries and instead of interest being paid, the interest had been credited in the books, possibly the contention of the learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 objection of the learned counsel for the department based on the decisions in Commissioner of Income-tax v. Greaves Cotton and Co. Ltd. and Chimanbhai Lalbhai v. Commissioner of Income-tax to the effect that in view of the finding of the Tribunal, that there was no accepta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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