1972 (5) TMI 3 - HC - Wealth-tax

Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that no valid gifts had been made by the assessee - it could not be said that the money had been completely transferred in favour of the donees. That being so, there was no valid gift- answer to the question referred to above would be in the affirmative

Summary

Issues Involved:
1. Validity of the gifts made by the assessee.
2. Application of the principles of gift under the Transfer of Property Act, 1882.
3. Distinguishing between entries in personal books and firm's books.
4. Relevance of previous case law in determining the validity of the gift.

Detailed Analysis:

1. Validity of the Gifts Made by the Assessee:
The primary issue was whether the Tribunal was correct in holding that no valid gifts had been made by the assessee. The assessee, Sheo Narain, claimed to have made a gift of Rs. 28,000 each to his three sons by making transfer entries in his books of account. The Tribunal and lower authorities found that there was no valid gift as the donees, especially the minors, had not accepted the gifts, and the assessee had not divested himself of the property since the amount remained within his control.

2. Application of the Principles of Gift under the Transfer of Property Act, 1882:
The judgment delved into the definition and requirements of a "gift" under Sections 122 and 123 of the Transfer of Property Act, 1882. A valid gift requires the transfer of property to be voluntary, without consideration, and accepted by the donee. For movable property, the transfer can be effected by a registered instrument or by delivery. The court emphasized that the ownership must completely vest in the donee, and the donor should have no control over the gifted property.

3. Distinguishing Between Entries in Personal Books and Firm's Books:
The court distinguished between entries made in the personal books of the donor and those made in the books of a firm. In Sheo Narain's case, the entries were made in his own books of account, over which he had complete control. This was contrasted with the case of Balimal Nawal Kishore, where the entries were made in the books of a firm, thus involving third-party control. The court concluded that mere book entries in Sheo Narain's own books did not constitute a valid gift as he retained control over the property.

4. Relevance of Previous Case Law in Determining the Validity of the Gift:
The court reviewed several precedents to determine the applicability of the principles to the current case. It distinguished the present case from Balimal Nawal Kishore, where the gift was deemed valid due to the involvement of a firm. The court found the facts of Commissioner of Income-tax v. Smt. Shyamo Bibi more analogous, where entries in personal books without actual transfer of possession were held insufficient for a valid gift. The court also reviewed other cases like Naunihal Thakar Dass v. Commissioner of Income-tax and Gopal Raj Swarup v. Commissioner of Wealth-tax, but found them inapplicable to the facts at hand.

Conclusion:
The court held that the assessee did not make a valid gift as per the legal requirements. The entries in his personal books of account did not divest him of control over the property, and there was no evidence of acceptance by the donees. Consequently, the Tribunal's decision that no valid gift had been made was upheld. The answer to the referred question was in the affirmative, confirming the Tribunal's decision.