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TMI Blog1971 (3) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... registering the same would amount to a complete transfer and delivery of the possession and divesting of the amount mentioned therein from the settlor to the trustees of the trust? " This reference arises out of the assessment of a Hindu undivided family for the assessment year 1961-62. Originally, a Hindu undivided family, Messrs. Harchandrai Hari Bux Rai, carried on business in Banarsi cloth. The family consisted of Hari Bux Rai Jalan, and his two sons, Sri Gopal Jalan and Vishwanath Prasad Jalan. The business suffered partition on or about October 22, 1938, and the assets were divided between the father and his two sons. After partition, the former Hindu undivided family business was converted into a firm of the same name and style wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. At the outset in its appellate order the Tribunal had addressed itself to the question whether a valid charitable trust was created by the settler, Hari Bux Rai, and whether the liability to the trust fund was taken over by the assessee in respect of which interest was paid and claimed by the assessee as a deduction. The Tribunal referred to the three certainties required to create a charitable trust, namely, (1) a declaration of the trust binding on the settler, (2) setting apart definite property and the settlor depriving himself of the ownership thereof, and (3) a statement of the objects for which the property is thereafter to be held by the beneficiaries. The Tribunal found that there was a declaration of the trust binding on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecific sum for the purposes of the trust and the settlor could not thereby be said to have divested himself of his beneficial interest therein. It has pointed out that on September 26, 1939, the cash balance in the books of the firm was about Rs.1,915 only, which was not at all sufficient to cover the amount of Rs. 25,000 said to have been settled on trust. It was pointed out by the assessee that the department had all along allowed the interest as an allowable deduction and also that the interest had been deducted in the hands of the other brother who had taken over the other half of the liability of the trust. The Tribunal, however, proceeding on the view that the cash balance available with the firm on the date of the creation of the tru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... structions, appropriate debit entries in his account in the books of the firm and corresponding credit entries in the account of the donee, in those books. And that is so, it has been pointed out, even where the cash balance in the books of the firm on the date of the gift was not large enough to enable actual delivery in cash to the donee of the amount gifted. Reference may be made to Commissioner of Income-tax v. New Digvijaysinhji Tin Factory, South Indian Lucifer Match Works v. Commissioner of Income-tax, E. S. Hajes Abdul Kareem and Son v. Commissioner of Income-tax, Balimal Nawal Kishore v. Commissioner of Income-tax and Naunihal Thakar Dass v. Commissioner of Income-tax . Finally, there is the decision of this court in Gopal Raj Swar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts and, therefore, it could not be said that there was any setting apart or appropriation of the fund. The learned judges observed : "She might have had assets in the partnership but she did not transfer them or any interest in them. The partnership might have been owing money to her but she did not transfer any money out of that to Om Nath ; she did not instruct the partnership to transfer Rs. 1,00,000 out of the money due to her to the account of Om Nath. If she wanted to make a gift of the money due to her from the partnership the most reasonable way was to instruct the partnership to debit her account, and credit that of Om Nath, with the amount of the money. Simply making transfer entries in own accounts cannot be said to be the mo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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