SOUTH INDIAN LUCIFER MATCH WORKS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE question referred for the determination of this court is :

(2.) IN the appeal before it, the Appellate Tribunal held that the allocation of capital to the partners was not real and that the amounts continued to belong to the Hindu undivided family. The validity of the gifts to the daughters was also questioned by the Tribunal, the Tribunal further holding that mere adjustment of entries in the books of account would not constitute valid gifts. Though the Tribunal accepted the position that there could be a valid partnership between a kartha of a Hindu undivided family, on the one hand, and a member of that family in his individual capacity, on the other, the fact that the capital introduced in the name of the latter was found to belong to the Hindu undivided family was destructive of the claim that a real partnership had been brought into existence. The appeal was dismissed. The question set out above has been referred under section 66(I) of Act.

(3.) THE proposition of law that a gift of moveable property, unless it is effected by a registered deed, can only be completed by delivery of the property to the done, cannot be disputed. In Mrs. Chambers v. Kelland Huxford Chambers, a testator, the head of a big business firm who had large assets but was not in a position to make gifts in cash, purported to give to his wife certain moneys which were credited to her name in the books of the company. THE question arose whether there was a declaration of a trust in respect of that sum. THE learned judges decided that mere book entries did not confer on determine rights and did not establish completed gifts. It was further held that though there was perhaps evidence of an intention to create a gift there was nothing to show an intention to create a gift there was nothing to show an intention to create a gift there was nothing to show an intention to create a trust with regard to that sum. Ramanathan Chettiar v. Palaniappa Chettiar dealt with a trust and it was held that a mere credit entry in the donors account without setting aside and appropriating the sum credited was not sufficient to create a valid trust. Muthappa Chettiar v. Commissioner of Income-tax also dealt with a case where a will directed the credit of two sums in the names of certain persons and was followed by a deed of declaration that the amounts so credited belonged to these persons only. But no assets or funds corresponding to the credit entries were set apart or allocated. THE conclusion reached by the learned judges was that no gift or irrevocable trust was created. THE question that arose in that case was, it may be stated, with reference to whether the assessee was entitled to deduct the interest on the sums alleged to have been so gifted.