9911796707
TMI Blog1980 (3) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of each of the minor sons by her on 18th December, 1961, and on 21st December, 1961, 90 shares of Messrs. Sentinel Rolling Shutters and Engineering Co. Pvt. Ltd. were purchased in the name of each of them. The assessee gave Rs. 20,000 to each of the two sons in December, 1962, for the purchase of 20 shares of Messrs. Colour Cartons Ltd. in the name of each of them. Admittedly, the dividends received in respect of the shares of Messrs. Colour Cartons Ltd. were credited to the account of the minors with the Bank of Baroda. On 30th March, 1963, a sum of Rs. 1,800 was debited to the savings bank account, of each of the two sons. The said amount is said to have been paid to the assessee as interest on loan from her. A similar entry for Rs. 2,600 was made on 6th April, 1964, in the savings bank account of each of the two minors. On 18th May, 1964, 30 shares of Colour Cartons Ltd. held in the name of each of the two sons were sold and a sum of Rs. 95,472 was credited in the account of each of them on that day. One month later, that is, on 19th May, 1964, Rs. 65,000 were debited to the account of each of the two sons. It was claimed by the assessee that this was on account of repayment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal was that to all intents and purposes, the assessee had transferred the funds from one of her own account to another of her own account and that the claim that a loan was advanced to the minors was a mere eyewash. The Tribunal took the view that " there was nothing to stop anybody entering into a contract with a guardian of a minor and there is nothing objection able in any person transferring any amount in his individual capacity to himself as guardian of his minor child ". Considering the circumstance that there was nothing in either of the two accounts of the minors to suggest that any amounts were utilised for the benefit of the assessee and that the dividends had been credited to their accounts and no part of those dividends had been utilised by the assessee or that there was nothing to suggest that the surplus realised on the sale of the shares was utilised for the benefit of the assessee, the Tribunal took the view that it was not possible to support the conclusion of the tax authorities that the shares and the accounts in question belonged to the assessee. The Tribunal also took the view that interest charged by the assessee to the minors was about 4% which could n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the net wealth of the assessee. Mr. Mehta appearing on behalf of the assessee has contended that the form in which the question has been directed to be referred earlier by this court and has consequently been in fact referred by the Tribunal cannot take in the controversy whether there was in law any loan at all. According to the learned counsel, the question which has been referred must be taken to have assumed that there is a valid transfer in favour of the two minor sons. Our attention was also invited to what was described by the learned counsel as a finding of fact recorded by the Tribunal when the Tribunal has observed in para. 4 of its order disposing of the appeal that " It is, therefore, not possible to support the conclusion of the tax authorities that the shares and the accounts in question belonged to the assessee The learned counsel contended that the transfer of moneys in favour of the minor sons must now be assumed to have been validly made and all that could be debated with reference to the question which is referred to the court is whether the transfer satisfied the requirements of s. 4 meaning thereby that it had only to be found whether the transfer was fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from entering into contract and there was nothing objectionable in any person transferring any amount in his individual capacity to himself as a guardian of his minor child. Having thus put down this legal proposition, the Tribunal went on to consider the fact of the case before it and on the circumstances enumerated earlier, it came to the conclusion that the amounts in question did not belong to the assessee. It was only thereafter that the Tribunal found that the assessee having taken interest on the loans advanced to the minor children, the transfer could be said to be for adequate consideration and that is how the Tribunal reached its final conclusion that s. 4(1)(a) was not attracted in the instant case. It is this order of the Tribunal that has now been subjected to the scrutiny in the form of the question which has been referred. The reference to s. 4(1)(a)(ii) in the question originally referred must be read in the context of the view which has been taken by the Tribunal. There can hardly be any dispute that the crucial question in the context of which s. 4(1)(a)(ii) has been referred is whether the amounts which were said to have been advanced by the assessee to her m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s alive because the accounts in the names of the minors were to be operated by the father and the mother (the assessee) of the minors. Any transaction which had to be entered into on behalf of the two minor children could in law be entered into only by the father, who was the natural guardian. As long as the natural guardian was alive, the mother has no legal capacity to act on behalf of her minor children unless, of course, she gets herself appointed as a guardian through the civil court on grounds which may be permissible to seek such an appointment. Therefore, when the assessee was purporting to act as the natural guardian of the minor and in that capacity wanted to create a liability against the minor in the form of a loan advanced by her personally to herself in her capacity as the natural guardian, if the intrinsic capacity of the natural guardian was lacking there was really no transaction which can be said to have been validly entered into by the assessee representing two different capacities, one as individual and the other as a natural guardian. The whole story of money being advanced by her to the minors represented by herself as a natural guardian must, therefore, be re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... father because, according to the learned counsel, if the account was operated by the father of the minors, then it would be possible for the assessee to argue that it was the natural guardian of the minor children who was operating the accounts. The learned counsel contended that this was a case in which the Tribunal should be directed to send an additional statement of case on the basis of which it would be possible to contend on behalf of the assessee that the assessee had not operated any account standing in the name of the minor children and that the father himself was acting as the natural guardian. We do not think that such a course is necessary in the present case. As already pointed out, we are really concerned with the initial transaction which admittedly, even according to the assessee, was brought about by her acting in both capacities. It was not the case of the assessee that when she purported to advance loans in the names of the minor children, those loans were received by the father or at least were shown to have been received by the father. Indeed, as already pointed out, the very basis on which the Tribunal has proceeded was that it was perfectly competent for ..... 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