9911796707
TMI Blog1996 (9) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... ton and Company " a proprietary concern. On July 20, 1962, the deceased made two cash gifts of Rs. 40,000 each to his two daughters, namely, Smt. Rajeswari and Gnanambigai, by debiting his capital account and crediting their accounts in his personal business book. On July 20, 1962, both the donees wrote letters to the deceased accepting the gifts and thanking their father. Again on July 27, 1962, each donee by separate letters thanking him once again for the gifts, requested the deceased to retain the same in the business and admit them as partners. Accordingly, a partnership was formed with effect from August 1, 1962, in which the donees and also the donor were the partners. As noticed, the deceased passed away on October 15, 1964. A quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gifted amounts in the business of the deceased and admit them as partners. It, therefore, follows that the transfer of gifts was complete with the condition or understanding that the gifted amounts for the capital account of the donees continue to be available for purposes of the business carried on by the deceased. (3) On making the gifts, the donees assumed such possession and enjoyment of the subject-matter of the gift as it was capable of at that time and that was also retained to the exclusion of the donor. (4) If the donor had some sort of control over the gifted amounts, it was not because of any reservation made by him while making the gifts, but the gift itself was made subject to the condition or understanding that the gifted a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the ratio laid down in such cases cannot be pressed into service to the facts of this case where the donor was sole proprietor of the concern and subsequent to the gift, the donees were taken as partners and the partnership came into existence. We do not think that learned counsel for the Revenue is right in making this submission. In Viswanathan's case [1976] 105 ITR 653 (SC), the donor was the sole proprietor when he gifted the total sum of Rs. 2,70,000 to his four major and two minor sons. After going through various decisions of this court, which have taken into account a number of English decisions, we find that the rigour with which section 102 of the English Act corresponding to section 10 of our Act was applied, has been mellow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he donor, or, to the entire exclusion of the donor in any benefit to him by contract or otherwise. It makes no difference whether the donee is a partner in the firm from before or is taken as such at the time of the gift or he becomes a creditor of the partnership firm by allowing it to make use of the gifed property for the purposes of the partnership." After observing as above, this court in the said case further observed as follows : " But we want to emphasise that the principles of law laid down by this court in several decisions which we have reviewed in this judgment with some further clarification and elucidation should be carefully and broadly applied to the facts of each case without doing too much of dichotomy and hair splitting ..... X X X X Extracts X X X X X X X X Extracts X X X X
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