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TMI Blog1976 (6) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... Baid, and his unmarried daughters, Kamala Kumari and Indu Kumari, who were at the relevant time respectively aged 20 years and 18 years. The other children of Surajmall Baid, viz., one daughter and two sons, members of the Hindu undivided family, were at the relevant time minors. The said document dated the 28th March, 1957, contained, inter alia, the following recitals : (a) That negotiations for the marriage of Kamala Kumari and Indu Kumari were going on and were likely to materialise at any moment : (b) Kamala Kumari had a keen and special interest for learning and higher education in foreign countries ; (c) Celebration of the marriages of the said daughters and performance of all rituals connected therewith were the legal, moral and social obligations of the family. The said deed further recorded the following : (a) being desirous of exonerating himself of the said obligation, and for making suitable provisions for the said three daughters viz., Kamala Kumari, Indu Kumari and Manju Kumari for higher studies Surajmall Baid as the karta of the said Hindu undivided family has parted with and given away absolutely and for ever Rs. 1,00,000 and Rs. 50,000 to the said Kam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, 1957, and on the 16th February, 1958, when the amounts were withdrawn from the business by the donees. Accordingly, he charged the said aggregate withdrawal of Rs. 1,50,150 to gift-tax. Being aggrieved, the assessee appealed to the Appellate Assistant Commissioner and contended that the gifts took place on the 28th March 1957, prior to the year under reference, the Gift-tax Act having come into force on the 1st April, 1957. The Appellate Assistant Commissioner came to the conclusion that mere book entries and the family arrangements did not make the two gifts effective before 1st April, 1957, and that the said gifts were complete and were taxable under the Gift-tax Act for the assessment year in question because delivery of possession was given on the 24th November, 1957, and the 16th February, 1958, both failing within the relevant assessment year. Being aggrieved by the order of the Appellate Assistant Commissioner the assessee preferred a further appeal therefrom to the Tribunal. Before the Tribunal it was contended on behalf of the assessee that the said gifts were made under the family arrangement recorded in writing and executed before a Notary Public. The letters of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, power, partnership or interest in property ; (c) the exercise of a power of appointment of property vested in any person, not the owner of the property, to determine its disposition in favour of any person other than the donee of the power ; and (d) any transaction entered into by any person with intent thereby to diminish directly or indirectly the value of his own property and to increase the value of the property of any other person." The Transfer of Property Act defines " gift " in section 122 as follows : " 'Gift' is the transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee. Acceptance when to be made.---Such acceptance must be made during the lifetime of the donor and while he is still capable of giving. If the donee-dies before acceptance, the gift is void." Section 123 of the Transfer of Property Act deals with transfer and provides as follows : " Transfer how effected.--For the purpose of making a gift of immovable property, the transfer must be effected by a registered instrument signed by or on beha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion. According to him transfer to be effective must be either by registered instrument as provided in section 123 of the Transfer of Property Act or it should be by delivery. In this case there was neither any registered instrument nor any delivery. Dr. Debi Pal, appearing on behalf of the assessee, contended on the other hand that in the instant case facts have been found which establish conclusively that there was a valid and effective transfer of property in the said amounts in favour of the donees. He contended that all that could be done to transfer the said amounts in law were done and delivery was effective as contemplated under section 33 of the Sale of Goods Act. In support of their respective contentions various decisions were cited from the Bar. I propose to deal with these decisions in their chronological order. The first is the decision in the case of Ida L. Chambers v. K. H. Chambers AIR 1941 Mad 154. The facts in this case were that in the years 1917 and 1919 certain entries were made in the books of a company crediting the donees with certain sums which were debited to the capital account of the donor. Separate accounts in the names of the transferees were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red could not be included in the income of the assessee. The next decision is also that of the Bombay High Court in the case of Commissioner of Income-tax v. New Digvijaysinhji Tin Factory [1959] 36 ITR 72 (Bom). Here, the assessee was a registered firm of two partners being the father and the son. The father executed a writing on the 2nd February, 1946, stating that out of his half share in the profits of the partnership he would give one-fourth to the wife of his son and one-fourth to his grandson retaining to himself the balance. On the 12th November, 1947, entries were made it the books of the firm debiting the account of the father and crediting the account of the daughter-in-law and the grandsons and grand-daughters. The question arose whether by reason of these entries there were complete and legally valid gifts. It was held by the Bombay High Court that although mere book entries could not result in a valid gift or trust but in the facts of this case the gifts had been accepted by the donees and the firm, the latter had paid interest on the amounts gifted and had allowed the donee to withdraw moneys. The court found that there were ample materials to satisfy the legal req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the books in the name of his minor son. Subsequently, the assessee made a declaration before the Presidency Magistrate that he had made a gift of the amount to his minor sons in the manner as aforesaid and the other partner of the firm would act as the trustee and guardian of the minor in respect thereof. The interest on the amount was credited in the account annually. The question arose whether such interest paid was deductible under section 10(2)(iii) of the Indian Income-tax Act, 1922. On these facts, the Bombay High Court held that mere debit and credit entries in the respective accounts would constitute neither a gift of movable property nor acceptance thereof by the donee and that there was no valid gift. The next decision was in the case of R. Subba Naidu v. Commissioner of Gift-tax [1969] 73 ITR 794 (Mad). Here the assessee made a gift of some shares in a limited company absolutely to his daughter under two deeds of settlement but the transfer was not registered and the shares continued to stand in his name in the books of the company and the dividends thereon were continued to be assessed in his hands. Subsequently, the daughter died but the shares were not treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rown his self-acquired property into the common stock of the Hindu undivided family and the question arose whether this amounted to a gift. The Supreme Court held that this was in effect the unilateral declaration of a Hindu coparcener, whereby he threw his self-acquired property into the common stock of joint family property. The Hindu undivided family was not a creature of contract and, by throwing into the common stock, the owner of the separate property, a coparcener, merely expressed his desire to blend his separate property with the coparcenary property. The separate property thereby ceased to be separate and acquired the characteristics of a joint family or ancestral property not by a physical mixture but by the volition and intention of the coparcener who waived and surrendered his exclusive rights to such separate property unilaterally. These was no question of the family rejecting or accepting the property and there was no donor or donee. Consequently, there was no gift within the meaning of Transfer of Property Act, nor did such an unilateral transaction fall within clause (d) of section 2(xxiv) of the Gift-tax Act. The section speaks of " disposition " which was a bilat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Commissioner of Income-tax, v. Ashok Glass Works reported in [1976] 103 ITR 379 (Cal). Here the partners of a firm made gifts of over Rs. 3 lakhs by debiting their respective accounts and making credit entries in the names of the donees. Interest on the amounts were credited to the account of the donees and deduction was claimed on the amount of interest. This court held that the contemporaneous entries showed that the transactions were genuine. There was no suggestion that the interest credited to the accounts were fictitious. Accordingly, this court upheld the decision of the Tribunal that the gifts were valid. A number of earlier decisions were considered and principles laid down therein were culled out as follows : (a) there must be some evidence of transfer of property in question from the donor to the donee ; (b) there must also be some evidence indicating the acceptance of the gift by the donee. (c) there was nothing irregular or improper to make a gift by debiting the partnership firm's account in the name of the donee, provided there was evidence that the gift was a valid one and was accepted by the donee. We have carefully considered the respective submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection of the Indian Contract Act which defined delivery did not contain the latter part of section 33 of the Sale of Goods Act, i.e., " or which has the effect of putting the goods in the possession of the buyer or of any person authorised to hold them on his behalf ". This contention is not of much substance. Section 123 of the Transfer of Property Act does not refer to any particular section of any particular statute but merely provides that delivery of a movable property for the purposes of a gift may be effected in the same way as the goods sold may be delivered. No authority was cited by Mr. Sen for the proposition that in construing a particular statute the provisions of other contemporaneous statutes in existence ought to be decisive or conclusive. In this view of the statutory provisions the decisions cited on behalf of the revenue do not advance the contentions of the revenue further. The Madras High Court in the case of Ida L. Chambers AIR 1941 Mad 154 did not consider section 33 of the Sale of Goods Act. Moreover, in that case, it was found as a fact that the donor was not in a position to make a gift in cash. Similarly, in the case of Shyamo Bibi [1966] 59 ITR I (All ..... X X X X Extracts X X X X X X X X Extracts X X X X
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