1974 (12) TMI 29

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... Two partners were Ramnivas Jhunjhunwalla and Birmadutt Jhunjhunwalla. They claimed to have made gifts of Rs. 3,75,000 to their respective nephews, and also other gifts by them. In the case of another partner, Murarilal, there were also certain gifts. We need not refer in detail to the actual amounts of gifts made. In all the cases, respective gifts were only by debiting the accounts of the respective donors and crediting the accounts of the respective donees, who were all minors. Before these gifts in June, 1955, Ramnivas had to his credit with the firm Rs. 7,12,914 and Birmadutt Rs. 6,37,368. The capital accounts of the partners stood at Rs. 18,43,000 in 1952 and Rs. 11,07,835 in June, 1955. There were loans taken from other parties amoun....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... claim for interest and held the same to be payments to the respective donor partners. There was an appeal before the Appellate Assistant Commissioner who took the view that the amounts to the credit of the capital account of partners were actionable claim within the meaning of section 3 of the Transfer of Property Act, and under section 130 of the said Act transfer could only be made by an instrument in writing. The Appellate Assistant Commissioner distinguished the cases cited before him and came to the conclusion that there was no gift or a valid transfer and the moneys credited in the accounts of the minors remained the property of the partners who effected the alleged transfer and the interest credited by the firm was held to be intere....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... necessary ingredients of constituting such gifts have come up for consideration in several decisions. We may refer to the decisions in the case of P. A. C. Ratnaswamy Nadar & Sons v. Commissioner of income-tax, in the case of Commissioner of Income-tax v. Smt. Shyamo Bibi in the case of Balimal Nawal Kishore V. Commissioner of Income-tax, in the case of Bhau Ram Jawaharmal v. Commissioner of Income-tax, in the case of Controller of Estate Duty v. C. R. Ramachandra Gounder and in the case of Commissioner of Income-tax & Controller of Estate Duty v. N. R. Ramarathmam. The principles that emerge from several decisions appear to us to be as follows: (i) There must be some evidence of transfer of property in question from the donor to the do....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....gatived by the Tribunal. Furthermore, we have the evidence that the partners had sufficient amount of money to make the gift in their capital account. We have also evidence in this case that the firm as such had sufficient amount of money to be credited in the name of the donees. There is also evidence that this firm used to carry on substantial money-lending business as indicated in the interest income earned by it. There is also evidence and finding that interest was paid to the donees. It is true as counsel for the revenue suggested that interest was paid to the donees by crediting the books of account of the partnership-firm. The books are not the personal books of the partners but are the books of account of the firm doing money-lendin....