Constructive delivery by book entry can complete a movable gift before year-end, affecting income-tax exemption claims.

A gift of movable property may be completed by constructive delivery through duly communicated and accepted book entries, where the donor ceases to hold the money as owner and the transferee is treated as in possession. On that basis, the later physical handing over of cash did not keep the donation incomplete after the close of the accounting year. The trust had accepted the entry and treated the amount as part of its general funds and donations receivable, so the gift was regarded as complete before year-end. The commentary notes that reliance on section 13(2)(h) was unjustified in these circumstances, and the assessee could not claim that the donation remained incomplete for exemption under section 11.

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Issues: Whether the assessee was entitled to exemption under section 11 of the Income-tax Act, 1961, where the donation was credited in the firm's books before the close of the relevant year and the cash was handed over to the trust in the following month.

Analysis: The donation was entered in the books of the donor firm at the instance of the donors, was communicated to the trust, and was accepted by it. The trust itself treated the amount as part of its general funds and as donations receivable. Applying section 123 of the Transfer of Property Act, 1882, and section 26 of the Sale of Goods Act, 1930, the Court held that delivery of movable property may be effected by an arrangement under which the transferee is put in possession through book entries and the donor ceases to hold the money as owner. The later physical payment in April did not prevent completion of the gift before the end of the accounting year. The Tribunal's reliance on section 13(2)(h) was therefore unjustified.

Conclusion: The assessee was not entitled to claim that the donation remained incomplete at the close of the year, and the Tribunal was justified in denying exemption under section 11.

Ratio Decidendi: A gift of movable property may be completed by duly communicated and accepted book entries that amount to constructive delivery, so that the donor ceases to hold the money for himself and the transferee is treated as in possession for purposes of the gift.

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