TMI Blog1979 (11) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... Rambha, Usha and Kiran. The deceased was partner in the firm, M/s. Shaligram Laxmichand Nathani, doing moneylending business. The other partners in the firm were his two sons, Govindlal and Shankarlal, and an outsider, Purshottamdas. From 3rd October, 1955, Govindlal ceased to be a partner in the firm and in his place his son, Gangadas became a partner. The deceased had an account with the firm. On 13th November, 1947, an amount of rupees one lakh was debited to this account and corresponding credit was given to a new account opened in the books of the firm in the name of Gangadas Nathani Account No. 1. This account of Gangadas continued up to Samvat Year 2009-10 when the amount of rupees one lakh was transferred to another account of Gangadas called Account No. 2. This account was actually started in the year 1949-50. There were credits of interest every year in this account; there were some other credits also. Further, there were debits on account of insurance premium and cash withdrawals and withdrawals for purchase of properties. On 13th November, 1947, another amount of Rs. one lakh was debited to the account of the deceased in the books of the firm and a credit was given t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the date on which the amounts were credited to their accounts in the books of the firm. The transfers were accepted by Sunderlal for himself and by Shankarlal for his son, Laxmichand, and his daughter, Kusum, and by Gangadas for his son, Ramratan, and daughters, Rambha, Usha and Kiran. The deceased also addressed a letter to the firm, making it clear that the amounts in question were to be paid to the parties at the time of their respective marriages. Letters were also addressed on behalf of the firm to Sunderlal, Shankarlal and Gangadas confirming the transfers and making it clear that the firm would be liable to pay the amounts only at the time of marriage and that till that time the amounts will remain as deposits in the respective names with the firm without interest. The deceased addressed separate letters to Sunderlal, Shankarlal and Gangadas on 18th November, 19-56, referring to the arrangements made by him with the firm about the transfer of the amounts and making it clear that the amount had been gifted to the transferees, that they were the sole owners of the amounts and that he had no claim over those amounts. The Asst. Controller included an amount of Rs. 3,45,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the property which is the subject-matter of the gift to the exclusion of the donor immediately upon the gift, and (2) the donee must have retained such possession and enjoyment of the property to the entire exclusion of the donor or of any benefit to him by contract or otherwise.' It was further held in that case that the word 'otherwise' in the second part of the section must be contrued ejusdem generis and must be interpreted to mean I some kind of legal obligation or some transaction enforceable at law or in equity which, though not in the form of a contract, may confer a benefit on the donor'. It was also held that the words 'by contract or otherwise' in the second part of the section only qualified the word 'benefit' and they did not control the words 'to the entire, exclusion of the donor'. Therefore, if the donor remained in possession and enjoyment of the subject-matter of the gift even without any legal right, the gift will not be excluded from the operation of the section. In determining the question of application of the section to a particular case, it has first to be ascertained as to what is the subject-matter of the gift, for the requirement for non-liability that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the section and hence there is no scope for any liberal construction of the section. The rule of construction applicable to such a provision is indicated in Munro v. Commissioner of Stamp Duties [1934] AC 61 ; 2 EDC 462 (PC), where in dealing with a similarly worded section of a New South Wales Statute, the Privy Council said: ' It is not always sufficiently appreciated that it is for the taxing authority to bring each case within the taxing Act and that the subject' ought not to be taxed upon refinements or otherwise than by clear words The subsequent decisions of the Supreme Court support the view taken in the aforesaid observations in Balkishan's case [1974] 94 ITR 243 (MP) [FB]. We may only refer here to the decision in CED v. R. V. Viswanathan [1976] 105 ITR 653 (SC), where the earlier cases were fully considered. The following passages from this judgment bring out its ratio (pp. 660, 662) : " The question as to whether gifted property should be held to be part of the estate of the deceased donor passing on his death for the purpose of section 10 of the Act is not always free from difficulty. It would depend upon the fact as to what precisely was the subject-matter of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s account in the firm was debited and the account of the donees with the firm was credited with the same amount. The donees operated their accounts and interest was credited to their accounts. In our opinion, the facts are fully covered by the decision of the Supreme Court in CED v. C. R. Ramachandra Gounder [1973] 88 ITR 448 (SC). In this case the deceased was a partner in a firm. He transferred sums of Rs. 25,000 each to the credit of his five sons in the firm's books. He also wrote to the five sons informing them of the transfer. The sons did not withdraw their amounts from the firm. The amounts continued to be invested in the firm for which interest was paid to them. On these facts it was held that there was an unequivocal transfer of Rs. 25,000 to each of the sons and the donees had retained possession and enjoyment of the amounts transferred to them to the entire exclusion from the possession and enjoyment of the donor. It was also held that the last limb of the condition relating to the benefit to the donor by contract or otherwise was inapplicable to this case. It was further held that the donor could only transfer such possession of the property as the nature of that prope ..... X X X X Extracts X X X X X X X X Extracts X X X X
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