Book entries alone do not complete a gift of partnership assets; deduction for interest credited to donees was denied.

Interest credited to alleged donees was not deductible because the underlying gifts from a partner's capital account were not validly completed by delivery. The transfer was effected only through debit and credit entries in the partnership books, and the firm's limited cash balance did not show an actual ability to hand over the property in satisfaction of the gifts. A partner has no exclusive right in partnership trading assets during the subsistence of the firm, and his interest is confined to profits and the value of his share on dissolution or retirement. On these facts, the entries did not amount to a completed gift of movable property, so the deduction claim failed.

---

---

Issues: Whether interest credited to the accounts of the donees was a permissible deduction, which depended on whether the underlying gifts made by a partner out of his capital account were validly completed by delivery.

Analysis: The gifts were sought to be effected by debit and credit entries in the partnership books, but the firm had only a small cash balance and no material showing any ability to hand over cash in satisfaction of the gifts. A partner has no exclusive right over partnership trading assets during the subsistence of the partnership, and his right is confined to profits and to the value of his share on dissolution or retirement. On these facts, the transactions amounted only to book entries and not to a completed gift of movable property by delivery within the governing legal framework.

Conclusion: The gifts were not validly completed, and the assessee-firm was not entitled to deduct the interest credited to the donees; the answer to the referred question was in the negative.

Ratio Decidendi: A gift of movable property out of partnership capital or trading assets is not completed merely by book entries unless the circumstances show a valid transfer by delivery and the donor has an exclusive transferable interest in the property gifted.

---