TMI Blog1970 (1) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. The transfer was effected by debiting the assessee's personal account in the books of the Hindu undivided family by the sum of Rs. 50,000 and crediting the same amount in the personal account of his son, Keshav Kumar Swarup. It is relevant to mention in this connection that on November 20, 1956, the date of the gift, the assessee had a substantial credit balance far exceeding the sum of Rs. 50,000 which he purported to give to his son. The adjustment of entries made as aforesaid in the books of the Hindu undivided family was in pursuance of a letter written by the assessee to the said Hindu undivided family on the same date. The letter, which is annexure " A " to the statement of the case, runs as follows : " Gopal Swarup M.A., Telephone No.85 Muzaffarnagar, Dated Nov. 20, 1956. M/S. GOPALRAJ SWARUP SONS, MUZAFFARNAGAR. Dear Sirs, I have decided to give, out of my free will, a sum of Rs. 50,000 (Rupees Fifty thousand only) to my son, Keshav Kumar. Please pay to the said gentleman this amount. From to-day I have no right, title or interest in the aforesaid amount. Yours faithfully, Sd/-- (Gopalraj Swarup)" The first assessment for wealth-tax after this gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his grand-children. The daughter-in-law of Vithaldas, in her turn, made an endorsement at the face of the instrument stating that she had accepted the gift on her part as well as on behalf of her minor children. There was also evidence in that case that the transaction was subsequently acted upon and the donees had withdrawn part of the amount standing to their respective credits. The amount of the gift, however, continued to remain invested in the firm which paid interest to the donees on their credit balance in the books. On these facts the Bombay High Court held that, although mere book entries could not result in a valid gift or trust, as, in this case, the gifts were accepted by the donees, and the firm had accepted the transaction, there was ample material to satisfy the legal requirements of a completed and valid gift. The Tribunal held that the decision of the Bombay High Court in the aforesaid case was distinguishable on facts. The Tribunal, however, did not indicate in its order the grounds of distinction. The Tribunal was of the view that the instant case was fully covered by the decision of the Privy Council in Chambers v. Chambers and of the Madras High Court in E. M. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t either file the accounts of the Hindu undivided family nor contend that on the date of the gift (November 20, 1956) the Hindu undivided family was not in possession of sufficient funds and was not in a position to deliver the amount gifted to the donees if they had so liked. The next case relied upon by the learned counsel for the assessee is a decision of this court in Juggilal Kamlapat v. Commissioner of Income-tax. In that case it was held that it cannot be laid down as a general legal proposition that because a person has not with him ready cash he cannot create a trust in excess of the amount. The trust in that case was created by one. Kamlapat a couple of days before his death. Shri Kamlapat gave an information to an employee of the assessee-firm, which was a banking concern, to the effect that he had donated two specific sums of money, one amount of Rs. 5 lakhs for charitable purposes and the other amount of Rs. 2,46,500 to some of his needy relations. On the same date the employee of the assessee firm, to which such information was given by the donor, Shri Kamlapat, opened an account styled " Kamlapat Ji Dharamkhata " crediting the same by the sum of Rs. 5 lakhs. On the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not been shown that the firm of which the assessee was a partner, did not possess the necessary cash in hand on the date of the gift. The facts of the present case are, therefore, clearly distinguishable from those in Smt. Shyama Bibi's case referred to above. It may be pointed out that Smt. Shyama Bibi's case came up for consideration before the Punjab High Court in Balimal Nawal Kishore v. Commissioner of Income-tax . In that case a Bench of the Punjab High Court presided over by Falshaw C.J., Mahajan J. sitting with him, after reviewing the facts of the Allahabad case observed as follows : " What the learned judges (of the Allahabad High Court) was considering in that case was whether the original entry by the assessee in her own account books, together with the execution of some kind of unregistered document, legally amounted to a gift or not..... It would certainly appear to be a permissible inference......that if the assessee had made the transfer through the accounts of the firm it might have been held to be a valid gift. " The decision in the Punjab case cited above entirely supports the gift of the assessee in the instant reference. It was laid down in that case t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attempt to give Mrs. Chambers an interest in the capital of his business to be measured on the basis of her having contributed two lakhs. The entire business, including the share in it which he had purported to credit to Mrs. Chambers, remained entirely under the unfettered control of Mr. Chambers. There was never any trust estate which the courts could administer. " It will be noticed that in that case the question of the validity of the so-called gift was not at all in issue before the Privy Council, evidently because the appellant did not dispute the decision of the Indian courts that there was no valid gift in the circumstances of that case, one of which was that the so-called donees were not permitted, in any one year, to withdraw any sum exceeding 10% of the amount credited to them in the books of the firm. As the question regarding the validity or otherwise of the so called gift was not in issue before the Privy Council we fail to see how the case could be cited as a binding authority for the view taken by the Tribunal that the facts in the present case were completely governed by that decision. In our opinion, the decision has no application to the facts of the instant c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial for our purpose. On a reading of the terms of section 130(1) of the Transfer of Property Act, quoted above, it would appear that the conditions necessary for the validity of the transfer of an actionable claim is that the transferor should execute an instrument in writing signed by him or by his duly authorised agent conveying all his rights and remedies in such actionable claim in favour of the transferee. In the Bombay case referred to above, there was no such instrument and it was, therefore held that there was no valid transfer of the debt owed by the firm to the assessee in favour of the two grand-children of the latter. In the present case, however, there was a contemporaneous instrument (annexure " A ") duly signed by the assessee transferring Rs. 50,000 to his son, Keshav Kumar, and directing the firm to pay the amount to the transferee. This was, in our opinion, sufficient compliance with the terms of section 130(1) of the Transfer of Property Act and the decision of the Bombay High Court in the above case must be distinguished on that ground. The last case on which Dr. Misra relied is another decision of the Bombay High Court in Virji Devshi v. Commissioner of Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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