TaxTMI 
TaxTMI 
1962 (2) TMI 98
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....ferred to the name of the partnership by the Assistant Collector of Central Excise on application made in December, 1955. The firm closed it accounts on 18th April, 1956, in respect of the year of account, 13th April, 1955, to 13th April, 1956, and submitted a return of income to the Income-tax Officer. Along with the return the firm also filed an application for registration of the firm under section 26A of the Indian Income-tax Act. The Income-tax Officer refused to register the firm. He observed that there was no document of gift by Ratnaswamy Nadar in favour of his six sons and that mere entries of credit in favour of the sons in the books of account of the business could not constitute gifts. He also observed that of the four major sons only one had business experience and the control and management of the business remained only with father, who was originally the sole proprietor. There was an appeal before the Appellate Assistant Commissioner, who affirmed the decision of the Income-tax Officer, taking the view that no genuine partnership was constituted under the deed dated 1st April, 1955. A further appeal was taken to the Income-tax Appellate Tribunal, and the Tribunal ....
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....r of Property Act as the transfer of existing moveable or immoveable property made voluntarily and without consideration by one person called the donor to another called the donee and accepted by or on behalf of the donee. The transfer for the purpose of making a gift of moveable property may be effected either by registered instrument signed by the donor and attested by at least two witnesses or by delivery. In the absence of a written instrument, a gift of chattels or moveables is incomplete without delivery. An oral gift of movables unaccompanied by delivery passes no property to the donee and such a gift is not a gift at all. "Actual delivery is not mere evidence of the gift but is part of the gift itself. In ordinary English language and in legal effect there cannot be a gift without a giving and taking" (Halsbury's Laws of England, Volume 18, page 372). But delivery need not necessarily be actual manual delivery. A constructive delivery by which the donee is effectively put in possession of the subject-matter of the gift is sufficient compliance of the requisite of law. The delivery of the key of the warehouse in which the gifted articles are stored or the delivery of ....
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....hip applied for registration under section 26A of the Income-tax Act. But registration was refused by the Tribunal on the ground that the amounts continued to belong to the family and that the gifts were not valid. On a reference to his court it was held that the sum of Rs. 5,000 each credited to the accounts of the daughters were gifts made by the father with the concurrence of the adult sons and the gifts could be completely made by the father having regard to the extent of the assets of the family, that it was not necessary for the validity of the gift to establish actual handing over of the amounts to the daughters. At page 328, Srinivasan J. observed as follows: "The proposition of law that a gift of moveable property, unless it is effected by registered deed, can only be completed by delivery of the property to the donee, cannot be disputed.......It is true......that there was no delivery of the gifts to the donees. It does not seem to us in case of this kind that there should be actual handing over of the amounts in question to the daughters and the subsequent credit by them into the accounts of the partnership firm following upon the partnership agreement." On t....
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....to condemn the partnership between the father and sons as being a fictitious one merely on the ground that the father has, under the terms of the partnership, the main control over the business. The application for transfer of the licence to the Assistant Collector of Excise was made only several months after the formation of the partnership. It cannot be said that the partnership is not genuine, because of the belated application for transfer of the licence. Learned counsel for the department has not contended that the partnership is illegal without the transfer of the licence. Rule 177 of the Central Excise Rules as found at page 99 of the Central Excise Manual, clause 4, is in these terms: "If the holder of a licence enters into partnership in regard to the business covered by the licence he shall report the fact to the licensing authority within 30 days of his entering into such partnership and shall get his licence suitably amended. Where a partnership is entered into, the partners as well as the original holder of the licence shall be bound by the conditions of that licence." It seems to be clear from the provisions of the Central Excise Act and the rules that ....