TMI Blog1970 (9) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... two partners, Kartar Singh and one of hia sons named Kahan Chand. The share of Katar Singh was twelve annas in a rupee while that of Kahan Chand was four ailtias in a rupee. By a letter dated January 31, 1956, Kartar Singh requested the assesee-firm to debit his account by Rs. 69,000 and to credit the accounts of his sons and daughter as under : Rs. Kahan Chand 15,000 Iran Chand 15,000 Kundan Lai 15,000 Raj Kumar 15,000 Vidya 9,000 _________ Total 69,000 ________ According to the above-mentioned letter of Kartar Singh he had gifted the amounts which were to be credited to the accounts of the persons named therein. The letter was as well signed by the donees in token of acceptance of the gifts in their favour. On January 31, 1956, the account of Kartar Singh with the assessee-firm showed a balance of Rs. 1,03,963. In pursuance of the letter a debit entry of Rs. 69,000 was made in that account and the balance was shown at Rs. 34,963. A credit entry of Rs. 15,000 was made in the account of Kahan Chand. Accounts in the names of Hari Chand, Kundan Lal, Raj Kumar and Vidya were started with credit entries showing the amounts gifted in their favour by their father ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er and it was not necessary for the donor to withdraw the gifted amount in cash from the assessee-firm to be reinvested by the donees in the same firm. The provisions of section 123 of the Transfer of Property Act, which provides that a gift of movable property may be effected either by a registered instrument or by delivery of possession, were as well submitted to have been complied with by symbolic delivery of the amounts by making credit entries in their accounts. Reliance was placed on Chimanbhai Lalbhai v. Commissioner of Income-tax, Balimal Nawal Kishore v. Commissioner of Income-tax, and Naunihal Thakar Dass v. Commissioner of Income-tax. In the case of Chimanbhai Lalbhai the assessee had made a gift of Rs. 5 lakhs to his son and of Rs. 2 lakhs to his daughter on November 17, 1952, and he made the necessary entries in his account books on that date. On November 8, 1953, he instructed a joint family firm carrying on the business of banking and with which he had an account to debit him with the two sums and interest earned up to that date and credit the accounts of his son and daughter with the corresponding amounts. The firm carried out the instructions and submitted a vouc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir already existing accounts. Balimal Nawal Kishore v. Commissioner of Income-tax was followed in the case of Naunihal Thakar Dass referred to above. Naunihal and his two sons, Parshotam Singh and Iqbal Singh, had constituted a registered firm. Naunihal who had sufficient credit balance in his capital account had issued instructions that certain sums be transferred to his daughter and daughters-in-law. The method adopted was that the amounts mentioned by him were debited in the accounts of the registered firm and were credited in the names of the ladies concerned. On the credit-balance of the donees, the firm paid interest and claimed deduction thereof. The learned judges of a Bench of the Punjab and Haryana High Court held the gifts to be valid. D. K. Mahajan J., while delivering the judgment of the court, made the following observations : " In our opinion, the matter really stands concluded by the decision of this court in Balimal Nawal.Kishore v. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital money or even property including immovable property. Once that is done whatever is brought in would cease to be the exclusive property of the person who brought it in. It would be the trading asset of the partnership in which all the partners would have interest in proportion to their share in the joint venture of the business of partnership. The person who brought it in would, therefore, not be able to claim or exercise any exclusive right over any property which he has brought in, much less over any other partnership property. He would not be able to exercise his right even to the extent of his share in the business of the partnership. As already stated, his right during the subsistence of the partnership is to get his share of profits from time to time as may be agreed upon among the partners and after the dissolution of the partnership or with his retirement from partnership of the value of his share in the net partnership assets as on the date of dissolution or retirement after a deduction of liabilities and prior charges. It is true that even during the subsistence of the partnership a partner may assign his share to another. In that case what the assignee would get wo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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