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TMI Blog1962 (2) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... is six sons with ₹ 4,500. On 1st April, 1955, a partnership deed between Ratnaswamy Nadar and his sons was executed. Four of his sons were adults and majors and two of them were minors. The minor sons were admitted to the benefits of the partnership. The firm so constituted was registered with the Registrar of Firms on 23rd January, 1956. The excise licence which stood in the name of Ratnaswamy Nadar, the father, was transferred to the name of the partnership by the Assistant Collector of Central Excise on application made in December, 1955. The firm closed it accounts on 18th April, 1956, in respect of the year of account, 13th April, 1955, to 13th April, 1956, and submitted a return of income to the Income-tax Officer. Along with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum of ₹ 17,519-8-6 was earned a profit by Ratnaswamy Nadar. The entries in the account books of the business dated 31st March, 1955, show the each one of the sons was gifted with the sum of ₹ 4,500. It cannot be seriously disputed that the father was in a position to make the gift to his sons and that there were sufficient assets of the business from which a valid gift could have been made. The question, however, is whether in fact and in truth the father intended to make gift of ₹ 4,500 to each of his sons with a view to enable the formation of a firm consisting of himself, his adult sons and the minor sons, who of course can only be admitted to the benefits of the partnership as the law disentitled minors to be partners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rument, a gift of chattels or moveables is incomplete without delivery. An oral gift of movables unaccompanied by delivery passes no property to the donee and such a gift is not a gift at all. "Actual delivery is not mere evidence of the gift but is part of the gift itself. In ordinary English language and in legal effect there cannot be a gift without a giving and taking" (Halsbury's Laws of England, Volume 18, page 372). But delivery need not necessarily be actual manual delivery. A constructive delivery by which the donee is effectively put in possession of the subject-matter of the gift is sufficient compliance of the requisite of law. The delivery of the key of the warehouse in which the gifted articles are stored or the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finding out whether the partnership is genuine or not but it will not be proper to sever the gift from the entire transaction and determine its validity disregarding the other aspects of the transaction. We wish to refer to the decision in South Indian Lucifer Match Works v. Commissioner of Income-tax [1961] 43 I.T.R. 319 to which on of us was a party. The facts of that case were as follows: On 24th February, 1952, in the account books of a business carried on by a Hindu undivided family a sum of ₹ 25,000 was debited to the capital account of the family. Out of that amount a sum of ₹ 15,000 was transferred to the capital account of an adult son of the joint family manager and ₹ 5,000 each to the capital account of his two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... validity of the gift do not rest on the mere entries in the account books of the business. The account books of the newly constituted firm disclosed that the capital of the sons in respect of the partnership business was furnished only by reason of the gift taking effect. The subsequent acts and conduct of the parties taken along with the entries of credit in the books of account together cumulatively establish a valid gift. We have reached the conclusion that there are enough materials in record to prove that the father made a true and valid gift of ₹ 4,500 to each of his six sons and that the partnership cannot be held to be sham or untrue on the ground that there was no antecedent gift prior to its formation. It is next contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e any reason to condemn the partnership between the father and sons as being a fictitious one merely on the ground that the father has, under the terms of the partnership, the main control over the business. The application for transfer of the licence to the Assistant Collector of Excise was made only several months after the formation of the partnership. It cannot be said that the partnership is not genuine, because of the belated application for transfer of the licence. Learned counsel for the department has not contended that the partnership is illegal without the transfer of the licence. Rule 177 of the Central Excise Rules as found at page 99 of the Central Excise Manual, clause 4, is in these terms: "If the holder of a licence ..... X X X X Extracts X X X X X X X X Extracts X X X X
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