Valid gift accepted for tax purposes, allowing interest on credited amounts as a deductible business expense.

A valid gift made on 28 March 1957 was treated as established, and that finding supported the claim for interest on the credited amounts. Because the gift had already been accepted in the connected gift-tax matter, the Court proceeded on the basis that the interest paid to the donees was applied in the assessee-firm's business. Once the gift's validity was accepted, no separate dispute remained over the character of the expenditure, and the interest claim followed. The question was answered in favour of the assessee, and the interest was allowable as a deduction.

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Issues: Whether a valid gift was made on 28 March 1957 in favour of the donees so as to justify allowance of interest claimed on the credited amounts for the relevant assessment years.

Analysis: The reference turned on the legal effect of the gift transaction already accepted in the connected gift-tax matter. The Court treated the validity of the gift on 28 March 1957 as established and proceeded on the basis that the interest paid to the donees was utilised in the assessee-firm's business. No separate controversy remained on the character of the expenditure once the gift was held valid, and the interest claim followed from that conclusion.

Conclusion: The question was answered in the affirmative and in favour of the assessee; the interest was allowable as a deduction.

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