Book-entry transfer can be a taxable gift when ownership is divested and the amount is beyond the donor's control.

Book entries can constitute a valid gift for gift-tax purposes if they place the amount beyond the donor's control and divest ownership in favour of the transferee without consideration. Here, the assessee transferred funds from her partnership account to her husband's account, and the amount was later treated as part of a partial partition among the husband and sons. As she retained no continuing right to recover the amount, the transfer was held to be a taxable gift under the Gift-tax Act, 1958. The contention that the amount was merely an actionable claim was rejected.

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Issues: Whether the transfer of Rs. 80,115 from the assessee's partnership account to her husband's account, followed by the amount being taken in partial partition, constituted a taxable gift under the Gift-tax Act, 1958.

Analysis: A valid gift need not always involve physical delivery. Where debit and credit entries in the books of account effectively place the amount beyond the donor's control and substitute the donee's ownership, the transfer can amount to a gift. On the facts, the assessee had the amount transferred from her account to her husband's account, and the amount then formed part of the property partitioned among the husband and sons. The assessee did not show any continuing right to recover the amount, and the transfer was without consideration. The contention that the amount was an actionable claim was not accepted.

Conclusion: The transfer constituted a gift liable to gift-tax and the answer to the referred question was against the assessee.

Ratio Decidendi: A transfer effected through book entries is a valid gift for gift-tax purposes if the amount is placed beyond the donor's control and ownership is divested in favour of the transferee without consideration.

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