Book entries transferring capital to sons can constitute taxable gifts when they show present intention to divest ownership.

Transfer of capital from an assessee's account to the accounts of his three sons was treated as a taxable gift under the Gift-tax Act because the statutory definition of gift covered transfer of movable property and the related concept of transfer included disposition, assignment and other alienation. The book entries showed a clear present intention to divest the assessee of his right to the amount and confer it on his sons, so the transfer was effective even without physical delivery. The transactions therefore constituted gifts chargeable to gift tax.

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Issues: Whether the transfer of capital from the assessee's account to the accounts of his three sons constituted gifts taxable under the Gift-tax Act, notwithstanding the absence of actual physical delivery under Mohammedan law.

Analysis: Gift-tax was chargeable under the Act in respect of gifts, and a gift was defined broadly as a transfer of movable or immovable property, while transfer of property included disposition, conveyance, assignment, settlement, delivery, payment, or other alienation. Even on the assumption that the Act did not depart from Mohammedan law in transactions governed by that law, the transfer entries in the firm's books showed a clear present intention by the assessee to divest himself of the right to the amount and to confer it on his sons. The subject-matter was treated as a transferable right, and the entries effected an effective transfer of that right.

Conclusion: The transactions amounted to gifts taxable under the Gift-tax Act, and the answer was against the assessee.

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