Mere book entries do not complete a gift; share loss was not allowable as a revenue loss in business.

Mere book entries in favour of a charitable institution did not complete a gift, because there was no acceptance by the donee and no evidence of delivery or completed transfer. In the absence of a completed gift, no enforceable debt or liability arose in the earlier accounting year, so the later transfer of shares could not be treated as a sale in discharge of a pre-existing obligation. The claimed loss was therefore not incurred in a sale transaction in the course of the assessee's share business and was not allowable as a revenue loss.

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Issues: Whether the loss of Rs. 2,12,540 was allowable as a revenue loss arising from the assessee's share business.

Analysis: The amount credited in the assessee's books in favour of the charitable institution did not amount to a completed gift because there was no acceptance by the donee and no evidence of delivery or a completed transfer. Mere book entries, without acceptance or other acts completing the gift, do not create a debt or liability in favour of the alleged donee. As no enforceable liability arose in the earlier accounting year, the subsequent transfer of shares could not be treated as a sale in discharge of a pre-existing debt. The claimed loss was therefore not incurred on a sale transaction in the course of the share business.

Conclusion: The loss of Rs. 2,12,540 was not allowable as a revenue loss arising from the assessee's share business, and the question was answered against the assessee and in favour of the Revenue.

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