- (1.) This appeal relates to the assessment under the Wealth-Tax Act, 1957 for the year 1964-65. The Wealth Tax Officer rejected the claim of the assessee for deleting the amount of Rs. 2 lakhs as gift. The assessee filed an appeal which was dismissed by the Appellate Assistant Commissioner. In further appeal the Appellate tribunal held that there was valid gift and the amount was liable to be excluded from the wealth of HUF. Thereafter, there was a reference to the High court under S. 27 (1) of the Wealth Tax Act, 1957.
(2.) The question of law referred to the High court was whether on the facts and in the circumstances of the case the sum of Rs. 2 lakhs was rightly excluded from the computation of the assessee's wealth. The High court on an analysis of the facts found that the tribunal came to the conclusion that the cash balance available with the assessee on the date of the alleged gift that is to say on 6/10/1954 was only Rs. 7,626. 00, although it had assets of about Rs. 7 lakhs in the form of negotiable securities etc. The tribunal also recorded after finding that Rs. 2 lakhs was gifted only by entry in the books of account. It was found further that no interest was ever paid to Tej Prakash from 6/10/1954 until October 1963, whereas sum a of Rs. 12,852. 00 was by way of interest credited in the account of Tej Prakash. It was further found as the High court noted that the amount of gift was never utilized by Tej Prakash for anypurpose of his own, but was available and was utilized for business of the HUF. From these facts the High court came to the conclusion that it was clear that the amount of Rs. 2 lakhs which was claimed to have been gifted was not available to the assessee for making gift on the date alleged. There was also no evidence of the acceptance of the gift. The only act alleged to be connected with the gift was the making of entries in the books. There was no evidence that the karta in his capacity as the guardian of the minor had accepted the gift. The High court noted undisputedly there were two persons, donor and the done and there was no acceptance of the gift on behalf of the done. On these facts found by the tribunal, the High court came to conclusion that in the facts of the case "there was no gift in facts made by Shri Kishan Das to Tek Prakash". In the circumstances the High court was of the opinion that a sum of Rs. 2 lakhs cannot be excluded from the computation of the wealth of the HUF. The question whether there could be a valid gift by entry of books of accounts in the HUF where there was no sufficient fund belonging to the firm in view of the circumstances of the cases in the facts noted by the High court, arose only incidentally. In that view of the matter, we are of the opinion that the High court was right in its conclusion that there was no gift in fact. If there was no gift in fact, no other question arises. The High court came to its conclusion on the materials found by the tribunal and in view of this, this appeal fails and is accordingly dismissed with no order as to costs.
(3.) This appeal arises out of the assessment of the income tax for deduction of the interest paid in the background of the facts narrated in the order in ca No. 1164 of 1974. In view of the said decision and findings of the High court that the gift was not valid in favour of Tej Prakash, the amount of the gift was all along property of the HUF. Therefore, no question of deduction of interest paid to Tej Prakash would arise in this case. In the premises this appeal must also fail and is accordingly dismissed with no order as to costs.;