BALIMAL NAWAL KISHORE Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE following question has been referred to this court by the Income-tax Appellate Tribunal under section 66(1) of the Income-tax Act :

(2.) THE case refers to the assessment of the partnership firm, M/s. Bali Mal Nawal Kishore, for the year 1957-58 for which the accounting year ended on the 31st of March, 1957. THEre were five partners in the firm, Nawal Kishore, his three sons, Jagan Nath, Deoki Nandan and Lal Chand, and also Atma Ram, who was apparently the natural son of Nawal Kishore, but was the adopted son of one Raje Lal. Nawal Kishore died on the 14th of December, 1956, but 9 days before he died, on the 5th of December, 1956, he made an entry in his own hand in the account books of the firm to the effect that he was making a gift of Rs. 60,000.00 out of an amount of some Rs. 81,000.00 standing to his credit in his capital account with the firm, in favour of 13 donees, the gift of Rs. 3,750.00 in the case of each of the four sons of partners, Jagan Nath, Atma Ram and Lal Chand and Rs. 15,000.00 in the case of Krishan Kumar, the only son of the partner, Deoki Nandan. THEse sums were credited on the same day, the 5th of December, 1956, in the accounts of the donees in the firms books and at the close of the financial year each was credited with the interest on the gifted sum due up to that as well as in the following year during which, according to the copies of the accounts of the donees filed and made part of the case, some of the donees actually withdrew sums of money from the amounts standing to their credit.

(3.) IT would certainly appear to be a permissible inference from this passage that if the assessee had made the transfer through the accounts of the firm it might have been held to be a valid gift.