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Issues: Validity of gift of Rs. 51,000 to son and inclusion of interest in total income
In this case, the primary issues revolve around the validity of a gift of Rs. 51,000 made by the assessee to his son, Kantilal, and the subsequent inclusion of interest related to this amount in the assessee's total income. The Tribunal initially included the income from a property in the assessee's hands, alleging that the property was purchased benami in Kantilal's name. The dispute arose regarding the ownership of the amount withdrawn by Kantilal to pay for his share of the property. The assessee claimed to have gifted Rs. 51,000 to Kantilal in 1956, which was transferred through book entries between different firms. The key question was whether this gift was validly executed. The court referred to previous cases establishing that a valid gift can be made through book entries if there is evidence of the donor's intention, acceptance by the donee, and subsequent actions confirming the gift. The court cited CIT v. Popatlal Mulji to support this principle. In this case, the gift of Rs. 51,000 was found to be valid as the assessee debited the amount from his account and credited it to Kantilal's account in different firms. The transfer of the amount to Kantilal's account in a new firm after dissolution of the old firm further substantiated the execution of the gift. There was no indication that the assessee retained control over the gifted amount post-transfer. Ultimately, the court answered the questions posed in the affirmative and negative, respectively, in favor of the assessee. The judgment clarified that both questions were decided in favor of the assessee, and the Commissioner was directed to bear the costs of the reference.
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