9911796707
TMI Blog1981 (9) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... all the three years and read as under: " 1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the gift of Rs. 1 lakh said to have been made by the assessee to his wife on March 20, 1963, was invalid and the entire claim of interest allegedly paid by the assessee in his wife's account were admissible deduction for the assessment years 1967-68, 1968-69 and 1969-70 ? 2. Whether, on the facts and in the circumstances of the case, the Income-tax officer was debarred from challenging the validity of the gift for the assessment years in question ? " The facts necessary for the decision of the questions lie in a narrow compass. The assessee was carrying on a business in motor parts. He claime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken up, the ITO took the view that there had been no valid gift made by the assessee to his wife. He pointed out that there was no written deed of gift and he was of the opinion merely placing a portion of the assessee's balance of the capital account under a separate account in the name of his wife did not tantamount to a valid gift. He pointed out that the assessee did not have any cash balance on the relevant date nor even business assets to the extent of Rs. 1 lakh on that date which he could have gifted in favour of his wife. In the view which he took, the ITO was of the opinion that there having been no gift, the question of any interest payment on an amount borrowed from the assessee's wife did not arise and he, therefore, added back ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nion that by merely making entries in the account books in a separate account of his wife, no valid gift could be said to have been made. It was also pointed out that on 20th March, 1963, there was not sufficient cash balance in the hands of the assessee and there was also no delivery of the cash balance to the alleged donee. Relying on the judgment in the cases of Shyamo Bibi [1966] 59 ITR I (All) and New India Colour Co. [1971] 80 ITR 206 (Delhi) and the other two decisions relied upon by the Department, the Tribunal allowed the Revenue's appeal. The Tribunal also rejected the contention put forward on behalf of the assessee that since the ITO had accepted the validity of the gift in the assessment years ) 964-65 to 1966-67, it was not op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal, this does not show either cash in hand or other tangible assets of the value of Rs. 1 lakh or above. There was, of course, some stock-in-hand and there were some outstanding dues to the assessee but it is not the case that either the stock was handed over to the wife or that the debts due to the assessee were assigned to her by way of gift. The assessee's case is that a sum of Rs. 1 lakh was gifted by him to his wife. The version of the gift was only sought to be supported by means of book entries which show that the sum of Rs. 1 lakh has been debited to the assessee's capital account and credited to the account of his wife. It may be that the assessee considered himself indebted to the wife to the extent of Rs. 1 lakh. But th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books of account pertaining to a business. We are unable to agree that this distinction makes any difference. The distinction is between entries in the books of account maintained by an individual which are under his control and possession and in which it is open to him to make any entries at any time and a case of entries in books of account maintained by a third party at the instance of the donor. We are unable to see any distinction between a case where the books of account are maintained by an individual for his private purposes and one where they are maintained for business purposes. Mr. Ahuja also contended that in this case the gift of Rs. 1 lakh should be treated not as a gift of cash but as a gift of the assets of the business to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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