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PETITIONER: COMMISSIONER OFINCOME TAX, KANPUR

       Vs.

RESPONDENT: DR. R.S. GUPTA

DATE OF JUDGMENT03/02/1987

BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) NATRAJAN, S. (J)

CITATION:  1987 AIR  785            1987 SCR  (2) 121  1987 SCC  (2)  84        JT 1987 (1)   340  1987 SCALE  (1)225  CITATOR INFO :  R          1987 SC 791  (6)  NF         1989 SC 640  (15)

ACT:     Sections  4,  27(1) and  29--Wealth  tax--Gift--Assessee directing  firm by a letter to debit his account of  certain amounts  and  credit  respective accounts of  his  sons  and grandsons--Gifts made out of love and affection--Entries  in account books--Whether constitute valid gift-Whether  inclu- dible  in  net wealth of assessee--Absence of  cash  balance with the firm or overdraft facilities with the  bank--Effect of.

HEADNOTE:     The Income Tax Officer included in the net wealth of the respondent-assessee  for the assessement year  1957-58,  two sums, viz., Rs. 1,50,000 and Rs.67,560/12/- which the asses- see claimed to have gifted. It is stated that on January  1, 1957 the respondent-assessee, by a letter directed a company in  which he maintained an account, to debit his account  to the  extent of Rs. 1,50,000 and credit in the names  of  his two  sons and grandsons various sums, as he had  decided  to give  away these amounts to them out of love and  affection. The company carried out the instructions and relevant  debit and credit entries were made in the respective accounts.  On the  same day, by two separate letters, the gifts  were  ac- cepted by the sons and later on these amounts were withdrawn by  the respective donees. In the case of second gift,  oral instructions were given for transferring the amounts  stand- ing to his credit.     The respondent-assessee having failed before the  Income Tax  Officer and the Appellate Assistant  Commissioner,  ap- pealed  to the Income Tax Appellate Tribunal  and  contended that  the  first  company was carrying on  the  business  of banking and hence the gifts in question were valid, and that the  Income Tax Officer and the Appellate Assistant  Commis- sioner had wrongly included these amounts in his net  wealth and  in the case of second gift, the assessee  claimed  that the amounts were gifted by him by transfer entries.     The  Tribunal found that there was no evidence that  the first  company was carrying on any banking business, and  in

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the  case  of second gift, the sum was  available  with  the company. It, therefore, held that the first company was  not carrying on banking business, and in the 122 second case, there was no valid gift. It, however,  referred the matter to the High Court.     The  High Court held that the Tribunal was not right  in holding  that the assessee did not make valid gifts  and  in holding  that the amounts were rightly included in  the  net wealth of the assessee. Allowing the appeal by the Revenue, this Court,     HELD: 1. In order to constitute a valid gift there  must be an existing property. In case of entries in the books  of account by credit and debit, the sums should be available on the  date of gift in the account of the firm whose  accounts are  said to be credited or debited. In the case of  banking companies  or other firms and companies who  have  overdraft facilities, even if the sums are not in credit of the  donor and  are  not with such companies or firms, gifts  might  be possible by adjustment of book entries. But in the cases  of non-banking companies or firms, if these companies or  firms do not have overdraft facilities, it is not possible to make valid gift if sums or funds are not available. [126E-G]     2.  It is possible in certain circumstances for a  donor to  make a valid gift by instructing a firm or a company  or H.U.F., in which the donor has an account to give effect  to the  gift by debiting his account and crediting the  account in  the  name of the donee. But in such  cases  merely  book entries would not suffice. The circumstances must be such as to  make  it clear that there were sufficient funds  at  the disposal  of the donor by reason of which he could make  the gift  by such book entries. The firm in which the donor  may have account may or may not have sufficient cash balance but it  must  have sufficient provision for overdraft  with  the bank  on  the basis of which it  could  honour  instructions given by the assessee. [126H;127A-B]     3. Each case must be decided on the facts of that  case. Where the assessee has a credit account with a firm or  with a family or with a banking company and that sum is available to  that  firm or the company or H.U.F. on the date  of  the gift,  then a valid gift by book entries might be  possible. But  where  a  sum was not available with the  firm  or  the H.U.F. or a company which was not a banking company or which had no overdraft facility, by mere book entries, even though there was acceptance of that gift by the donee a valid  gift would not be effectuated. [131D-E]     4.  In  the instant case, the entries in  the  books  of account could not effectuate valid gifts. The only sum which could be taken by the donee was Rs.4,000 in the case of  the first company, which had no 123 overdraft facility with the bank. Thus, there was no  exist- ing  goods to be parted. The High Court was,  therefore,  in error  in  answering  the  questions  against  the  Revenue. [132E-F]     [Appeal  allowed. Order and Judgment of the  High  Court set aside.]     Gopal Raj Swarup v, Commissioner of Wealth-tax, Lucknow, 77  I.T.R.  9  12; Indian Glass Agency  v.  Commissioner  of Income-Tax, New Delhi, 137 I.T.R. 245; New India Colour  Co. v.  Commissioner  of Income Tax, New Delhi, 80  I.T.R.  206; Commissioner  of Income Tax, West Bengal 111 v. Ashok  Glass Works, 103 I.T.R. 379; Commissioner of Gift Tax, West Bengal 111 v. Tarachand Meghraj, 109 I.T.R. 775; Chimanbhai Lalbhai v.  Commissioner of Income Tax (Central), Bombay, 34  I.T.R.

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259;  Commissioner  of Income Tax,  Ahmedabad  v.  Digvijay- singhji  Tin Factory, 36 I.T.R. 72; Commissioner of  Income- Tax,  Bombay City-I1 v. Popatlal Mulji, 108 I.T.R. 4;  Addl. Commissioner  of Income-Tax, Poona v. Dharsev Keshavji,  143 I.T.R. 509; Commissioner of Income-Tax, Poona v.  Devinchand Uttamchand, 148 I.T.R 530; Baliram Mathuradas (By his  Legal Heir,  Madanlal  Paliram)  v.  Commissioner  of  Income-Tax, Bombay  City-H, 59 I.T.R. 278; Virji Devshi v.  Commissioner of Income-Tax, Bombay, 65 I.T.R. 291; E.M.V. Muthappa  Chet- tiar  v.  Commisioner of Income-Tax, Madras, 13  I.T.R  311; Mrs.  Ida  L. Chambers and Three Others v.  Kelland  Huxford Chambers, 1941 I.L.R. 232; Balimal Nawal Kishore v.  Commis- sioner  of Income-Tax, Punjab, 62 I.T.R. 669;  Sukhlal  Sheo Narain  v.  Commissioner of Wealth-Tax, Haryana,  89  I.T.R. 157;  Abba Dada and Company v. Commissioner  of  Income-Tax, Burma,  6 I.T.R. 470; K.P. Brothers v. Commissioner  of  In- come-tax,  New Delhi, 42 I.T.R 650; Commissioner  of  Income Tax, U.P.v. Smt. ’Shyamo Bibi, 59 I.T.R. 1; Commissioner  of Wealth-Tax  v. Gulab Rai Govind Prasad, 85 I.T.R. 308;  Bhau Ram  Jawaharmal  v. Commissioner of Income Tax, ’  U.P.,  82 I.T.R. 772; Gopal Jalan v. Commissioner of Income-Tax, U.P., 86 I.T.R. 317; Phool Chand Gajanand v. Commissioner of Income-Tax, U.P., 89 I.T.R. 148; Controller of Estate  Duty, Punjab, Haryana, J. & K., H.P. and Chandigarh v.  Kamlavati, 120 I.T.R. 456, referred to.

JUDGMENT: CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 1713(NT)  of 1973.     From  the.  Judgment  and Order dated  6.1.1971  of  the Allahabad High Court in Wealth Tax Reference No. 285 of 1965 124 S.C. Manchanda and Ms. A. Subhashini for the Appellant. Respondent-in-person. (Not present ) The Judgment of the Court was delivered by     SABYASACHI  MUKHARJI, J. The appeal under section  29(1) of the Wealth-Tax Act, 1957 (hereinafter called the Act)  is directed against the judgment and order of the High Court of Allahabad dated 6th of January 1971. The questions  involved before  the  Allahabad  High Court in  the  reference  under section 27(1) of the Act were as follows:                    (1)  Whether,  on the facts  and  in  the               circumstances of the case, the Tribunal right-               ly  held that the assessee did not make  valid               gifts aggregating Rs. 1,50,000 on 1.1. 1957?                    (2)  Whether,  on the facts  and  in  the               circumstances of the case, the Tribunal right-               ly  held  that the assessee  did  not  validly               assign Rs. 1,50,000 in favour of his sons  and               grand sons by his letter dated 1.1. 1957?                    (3)  Whether,  on the facts  and  in  the               circumstances of the case, the Tribunal tight-               ly  held  that  the sum of  Rs.  1,50,000  was               properly   included  in  the  assessee’s   net               wealth?                    (4)  Whether,  on the facts  and  in  the               circumstances of the case, the Tribunal right-               ly  held that the assessee did not make  valid               gifts aggregating Rs.67,560/-                    (5)  Whether,  on the facts  and  in  the               circumstances of the case, the Tribunal right-               ly  held  that the sum of  Rs.67,560/12/-  was               rightly  included  in the net  wealth  of  the

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             assessee?     The case relates to the assessment year 1957-58 and  the relevant date of valuation was 31st March, 1957. The  asses- see,  Dr. R.S. Gupta had maintained an account in the  books of Messrs. Tika Ram and Sons Pvt. Ltd. On 1st January, 1957, the  account showed a credit of Rs. 1,50,740. On  that  day, the  assessee had addressed a letter to the Company  stating that  he  had decided to gift away for  love  and  affection various sums to the following persons: 125 Ved Prakash Gupta       ...                Rs.25,000 Om Prakash Gupta       ...                Rs.25,000 Hari Prakash Gupta       ...                Rs.50,000 Pravin Kumar Gupta     ...                Rs. 50,000 By  that  letter the assessee had directed  the  Company  to debit  his account to the extent of Rs. 1,50,000 and  credit the  respective amounts in the names of the  aforesaid  per- sons.  It  appears further that copies of this  letter  were sent  to one Om Prakash Gupta and Ved Prakash  Gupta.  There was  no dispute that instructions of the assessee were  car- ried  out by the Company and relevant debit and  credit  en- tries were made in the respective accounts. On the same  day i.e.  on  ist January, 1957, Om Parkash Gupta wrote  to  the assessee, his father, thanking him for the gift of Rs.25,000 made  in his favour and the gift of Rs.50,000 in  favour  of his son Pravin. A similar letter was written by Ved  Prakesh thanking the assessee, his father, for the gift of Rs.25,000 made  to  him and Rs.50,000 gifted to his son.  It  must  be mentioned,  however, that the company i.e. Messrs  Tika  Ram and Sons. Pvt. Ltd. was stated to be running an oil mill and carrying  on  business  as grain  tillers.  contractors  and brick-kiln  owners.  It was also stated to  be  carrying  on business  of advancing money and taking money on  loan  when necessary. But it appears that it was admitted position that Tika  Ram  &  Sons had a cash balance  of  Rs.4000  only  on 1.1.1957  and it did not have any overdraft facilities  with any bank. The respective donees were stated to have later on withdrawn  amounts from the amounts so transferred to  their accounts.  The  assessee contended that a total sum  of  Rs. 1,50,000  was  validly gifted by him to his sons  and  grand sons and hence the amounts had been wrongly included in  his net  wealth  by  the Income-Tax Officer  and  the  Appellate Assistant Commissioner. It was his contention that Tika  Ram &  Sons  carried on the business of banking  and  hence  the gifts  were valid. But there was no evidence that  Tika  Ram and Sons were carrying on any banking business.     The Tribunal held that they were not carrying on banking business. The main question therefore that falls for consid- eration  is whether gifts in question made by  transfer  en- tries  in the books of debtor company were valid gifts  even though  the debtor company was not carrying on  business  of banking  and had no cash in hand for the amount in  question on that date. Gift is defined in section 122 of the Transfer of Property Act, 1882 as transfer of certain existing  mova- ble  or  immovable  property made  voluntarily  and  without consideration by 126 one person, called the donor, to another, called the  donee, and  accepted by or on behalf of the donee. Section  123  of the  said  Act  deals with how transfers  are  effected  and stipulates,  inter  alia, that for the purpose of  making  a gift of movable property as in this case, the transfer  must be effected either by a registered instrument signed by  the donor and attested or by delivery. Such delivery may be made in the same way as goods sold may be delivered.

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   The  next contention was regarding the inclusion of  net wealth a sum of Rs.67,560/12/- standing to the credit of the assessee  in the books of M/s Pearls & Beads.  The  assessee claimed to have gifted the said amounts by transfer  entries in  the books of M/s Pearls & Beads on 30th March, 1957.  No letter as in the previous case was addressed by the assessee but only oral instructions were said to have been given. The Tribunal  held that there was no valid gifts. There  was  no evidence,  it appears, that the said sum was available  with the said firm of M/s Pearls & Beads.     The  High Court in view of the decision of the  Division Bench  of the Allahabad High Court in the case of Gopal  Raj Swarup v. Commissioner of Wealth-tax, Lucknow, 77 I.T.R. 912 answered  the first question in the negative and so  far  as the  second question is concerned, it declined to answer  as it  did not arise in view of the answer given to  the  first question  and the questions Nos. 3,4 and 5 were answered  in the  negative. Aggrieved by the said decision,  the  revenue has come up in appeal.     In  order  to constitute a valid gift there must  be  an existing  property. In case of entries in the books  of  ac- count  by credit and debit, the sums should be available  on the  date of gift in the account of the firm whose  accounts are  said to be credited or debited. In the case of  banking companies  or other firms and companies who  have  overdraft facilities, even if the sums are not in credit of the  donor and  are  not with such companies or firms, gifts  might  be possible by adjustment of the book entries. But in the cases of  non-banking  companies or firms, if these  companies  or firms  do not have overdraft facilities, it is not  possible to make valid gift if sums or funds are not available.  This question has been examined by the various High Courts.     It  is possible in certain circumstances for a donor  to make  a valid gift by instructing a firm or a company  or  a H.U.F.  in which the donor has an account to give effect  to the  gift by debiting his account and crediting the  account in the name of the donee. But in such cases 127 merely  books entries would not suffice.  The  circumstances must be such as to make it clear that there were  sufficient funds  at  the disposal of the donor by reason of  which  he could make the gift by such book entries. The firm in  which the  donor may have account may or may not  have  sufficient cash  balance  but  it must have  sufficient  provision  for overdraft  with  the bank on the basis it could  honour  in- structions  given by the assessee. This position of law  has been referred to and reiterated by the Bench decision of the Delhi  High Court in the case of India Glass Agency v.  Com- missioner of Income-Tax, New Delhi, 137 I.T.R. 245.  Justice Ranganathan  of  the  Delhi High Court  after  referring  to several  authorities has observed that book entries  may  be sufficient  only when circumstances make it clear  that  the gift  was genuine and the firms where accounts transfer  are effected  must  have sufficient cash in hand  or  sufficient provision for overdraft facility upon the basis of which  it would  honour  the instructions given by the  assessee.  The assessee must also have sufficient credit balance to  enable him  to make the gift. Reference may also be made  for  this proposition  to the decision of the Delhi High Court in  New India  Colour Co. v. Commissioner of Income:Tax, New  Delhi, 80 I.T.R. 206     The effect of the two aforesaid decisions of the learned fudges of the Delhi High Court indicates that in case  there was not sufficient cash balance from out of which the amount gifted could be physically given to the donee, more  entries

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in  the  books of account in the form would  not  constitute delivery of possession over the gifted property to the donee and  gift  in  such case will not be  valid.  The  position, however,  might be different if such firms or  companies  or H.U.F.  in whose accounts gifts are effected have  overdraft facilities.     The  Calcutta  High Court had occasion to  discuss  this aspect  in  the  case of Commissioner  of  Income-Tax,  West Bengal 111 v. Ashok Glass Works, 103 I.T.R 379. There it was held  on facts that the entries had been made  contemporane- ously showed that the transaction was genuine and there  was no suggestion that the interests which were credited in  the accounts  of the minor donees by the firm which  carried  on money-lending  business also were fictitious.  The  Tribunal therefore,  it was found, tightly held that the  gifts  were valid  and  the  interest paid in respect  of  the  accounts standing in the name of the donees was allowable as a deduc- tion in the hands of the assessee firm.      The  Calcutta  High Court had to consider this  in  the case  of Commissioner of Gift-Tax, West Bengal 111 v.  Tara- chand  Maghraj, 109 I.T.R. 775. There the High  Court  after discussing various decisions 128 including  certain  decisions of the  Allahabad  High  Court which we shall presently note and the provisions of  section 122  of the Transfer of Property Act, 1882, and the Sale  of Goods  Act. held that under section 123 of the  Transfer  of Property  Act,  in  case of gift of  movable  property,  the transfer  may be effected by delivery. Such delivery may  be in  the same way as goods sold may be delivered. Section  33 of the Sale of goods Act permitted the parties to deliver by any  manner  or  method which the parties  agreed  would  be treated  as delivery or which had the effect of putting  the goods  in the possession of the buyer. In that case, it  was found that the effect of the transaction in that case was to put  the amounts in the possession of the assessee  who  was authorised to hold the amounts on behalf of the donees which resulted in a delivery of the amounts within the meaning  of the Sale of Goods Act. The Court, however, pointed out  that it was held that there was no valid gift on the date of  the entries, then it could not be held that, subsequently,  when the  money  was transferred by further entries in  the  same books, it resulted in a valid gift.     In  the instant case before us and we have noted and  we reiterate only a sum which could be taken by the donees  was Rs.4000 in Messrs Tika Ram & Sons Pvt. Ltd. and there was no overdraft facility of Tika Ram & Sons with any bank. In that view of the matter, there was no existing goods to be  part- ed.     Before the Bombay High Court, in the case of  Chimanbhai Lalbhai v. Commissioner of Income-Tax (Contral), Bombay,  34 I.T.R.  259  there were entries in the books  of  a  Banking Company  and  gifts were held to be valid. In  the  case  of Commissioner of IncomeTax, Ahmedabad v. Digvijaysinghji  Tin Factory, 36 I.T.R. 72, on the contrary it was held that  the gifts were valid though not sufficient cash with firm avail- able  but proper book entries were made. See also the  cases of  Commissioner  of Income-Tax, Bombay City-H  v.  Popatlal Mulji,  108 I.T.R. 4 and also in the case of  Addl.  Commis- sioner of Income-Tax, Poona v. Dharsey Keshavji, 143  I.T.R. 509  and  Commissioner  of Income-Tax,  Poona  v.  Devichand Uttamchand,  148 I.T.R. 530. In the background of  facts  of those  cases the Bombay High Court held that the gifts  were valid. In the case of Baliram Mathuradas (By his legal Heir, Madanlal  Paliram)  v. Commissioner  of  Income-Tax,  Bombay

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City-II, 59 I.T.R. 278 the Bombay High Court had occasion to consider  this question and held that there was no  evidence of  acceptance.  It was held by the Bombay High  Court  that there  was  no valid gift. Similarly, in the case  of  Virji Devshi v. Commissioner of Income-Tax, Bombay, 65 I.T.R.  291 the Bombay High Court held 129 "Just  as  the entries in his own account book by  a  person would  not constitute a valid transfer even the  entries  in the accounts of the firm would not be sufficient."     The Madras High Court had also taken divergent views. It may be noted that in E.M.V. Muthappa Chettiar v. Commission- er  of  Income-Tax, Madras, 13 I.T.R. 311  the  Madras  High Court  held that mere entries were not enough to  constitute valid  gifts particularly when gift of fund continued to  be used in the donors’ business.     The  Madras High Court in the case of Mrs. Ida L.  Cham- bers  and Three Others v. Kelland Huxford  Chambers,  [1941] I.L.R. 232 was dealing with a case where C, proprietor of  a business  who had invested a large amount of capital in  it, caused entries to be made in his account books crediting his wife and certain other members of his family with sums which were  debited to his capital account. Separate  accounts  in their  names were opened in the books and in their  accounts the  credits were entered. The entries were followed  up  by letters  to the effect, inter alia, that the sums  were  en- tirely in the nature of personal gifts from C and would bear interest  payable  half-yearly. C was not in a  position  to make gifts in cash of the amounts credited in favour of  his wife  and  relatives.  He had large assets  but  these  were represented by land, buildings, plant, machinery and  stock- in-trade.  Interest on the amounts was also credited in  the accounts regularly for some time, until a bank from which  C had  obtained  an overdraft objected to  such  crediting  of interest. C’s wife withdrew various sums of money from  time to time from the interest account and whenever C desired  to retransfer  amounts to his capital account he obtained  let- ters  of  consent from her. The principal  amounts  credited were shown as ’deposits" in the balance sheets of the  busi- ness  for  some  years and were thereafter  referred  to  as "unsecured loans". On a question arising whether there was a valid  gift or trust in respect of the said amounts, it  was held  by  the Division Bench of the Madras High  Court  that there  was  no completed gift of the  principal  amounts  as there was no registered deed and as there was no delivery of the  property. Though C had the intention of  making  gifts, the  entries in the books did not complete the gift. It  was further  held that there was no trust either and that  there was  nothing  in the acts or conduct of C to  show  that  he intended to create a trust or to constitute himself a  trus- tee.  Where moneys were actually paid by way of interest  on the alleged gifts, those became completed gifts. This  deci- sion went up to the Privy Council but on the aspect of gift, no  opinion  was expressed by the  Judicial  Committee.  The decision  of  the Privy Council is reported in ILR  1944  at page 617. 130     The  Punjab  and Haryana High Court  in  Balireal  Nawal Kishore v. Commissioner of Income-Tax, Punjab, 62 I.T.R. 669 held that the credit cash balance of the donor was Rs.81,000 and cash balance with firm was only Rs.4,299 but the  unuti- lised  overdraft of the firm was Rs. 1,27,088. The gift  was held to be valid.     In  Sukhlal Sheo Narain v. Commissioner  of  Wealth-Tax, Haryana,  89 I.T.R. 157 the Punjab & Haryana High Court  had

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dealt with a case where the father had gifted Rs.84,000 i.e. Rs.28,000  to each of his sons. Father had complete  control and  dominion over that amount. There was no  evidence  that gifts were accepted on behalf of minors. It was held by  the High Court that gifts were invalid.     Rangoon  High Court in Abba Dada and Company v.  Commis- sioner of Income-Tax, Burma, 6 I.T.R. 470 held that the mere book entries were not sufficient in that case to  constitute valid gift.     The Rajasthan High Court in K.P. Brothers v. Commission- er  of Income-Tax, New Delhi, 42 I.T.R. 650 held that  there was a valid gift but in that case it was a banking company.     The Allahabad High Court in the case of Commissioner  of Income-Tax, U.P.v. Smt. Shyamo Bibi, 59 I.T.R 1. had to deal with a case where the credit balance of 2-1/2 lakhs was with the firm. Balance of the firm was only Rs. 15. Memo of  gift recorded  on stamp paper. It was held that the gift was  not valid.     In  Commissioner of Wealth-Tax v. Gulab Rai Govind  Pra- sad,  85 I.T.R. 308 there was an alleged gift of Rs.2  lakhs to minor son by book entries. Cash Balance was only Rs.7626. No  interest was credited to donee’s account. No  acceptance was produced. Property purchased out of gift and income  was used  by  the family. It was’ held that there was  no  valid gift. But the Allahabad High Court in the case of Gopal  Raj Swarup v. Commissioner of Wealth-Tax, Lucknow (supra) had to deal  with the wealth-tax. There the assessee was the  karta of  a  Hindu undivided family. On 20th November,  1956,  the assessee purported to transfer Rs.50,000 from his account to the account of his son. The transfer was effected by  debit- ing  the  assessee’s personal account in the  books  of  the Hindu undivided family with Rs.50,000 and crediting the same in the personal account of his son. On 20th November,  1956, the assessee had a substantial credit balance exceeding  the sum of Rs.50,000 which he purported to give to his son.  The adjustment  of entries made in the books of account  was  in pursuance of a letter 131 written  by the assessee to the said Hindu undivided  family on the same date. The Wealth-Tax Officer and the  Income-Tax Officer  rejected  the  contention that he made  a  gift  of Rs.50,000 to his son and this amount should be excluded from his taxable net wealth. The Tribunal never doubted that  the transaction  in  question was bona fide  but  dismissed  the appeal of the assessee on the sole ground that the  transfer evidenced by the entries in the books of account and by  the declaration, did not operate to bring into existence a valid gift. It was held on the facts of that case that the  asses- see had made a valid gift of the value of Rs.50,000. In  the impugned judgment, the Allahabad High Court had followed the said  decision. The said decision was also followed in  Bhau Ram  Jawaharmal  v.  Commissioner of Income  Tax,  U.P.,  82 I.T.R.  772  in Gopal Jalan v. Commissioner  of  Income-Tax, U.P.,  86 I.T.R. 317 and in Phool Chand Gajanand v.  Commis- sioner of Income-Tax, U.P., 89 I.T.R. 148     We are of the opinion that each case must be decided  on the  facts  of that case. Where the assessee  has  a  credit amount  with firm or with family or with a  banking  company and  that  sum is available to that firm or the  company  or H.U.F.  on the date of the gift, then a valid gift  by  book entries might be possible but where a sum was not  available with  the  firm or the family or a company which was  not  a banking company or which had no overdraft facility, by  mere book  entries even though there was acceptance of that  gift by the donee would not effectuate a valid gift.

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   The Court in Controller of Estate Duty, Punjab, Haryana, J.  & K., H.P., and Chandigarh v. Kamlavati, 120 I.T.R.  456 had  to  deal with gift by way of transfer  in  the  account books.  There  this Court held that when  the  property  was gifted by a donor the possession and enjoyment of which  was allowed  to  a  partnership firm in which the  donor  was  a partner, then the mere fact of the donor sharing the  enjoy- ment  or the benefit in the property was not sufficient  for the application of section 10 of the Estate Duty Act,  1953, until  and  unless  such enjoyment or  benefit  was  clearly referable to the gift, i.e. to the parting with such  enjoy- ment  or  benefit by the donee or permitting  the  doner  to share them out of the bundle or rights gifted in the proper- ty. If the possession, enjoyment or benefit of the donor  in the property was consistent with the facts and circumstances of the case other than those of the factum of gift, it could not  be said that the donee had not retained the  possession and enjoyment of the property to the entire exclusion of the donor,  or,  to  the entire exclusion of the  donor  in  any benefit  to  him  by contract or otherwise.  There,  M,  the deceased, was a 132 partner in a firm having a half-share in the partnership. On 27th March, 1957, M made a gift of Rs. 1 lakh to his son, L, and of Rs.50,000 to his wife, K, by making debit entries  in his  account  in the firm and corresponding credits  to  the accounts  of L and K. With effect from 28th March,  1957,  L was  taken  as a partner in the firm by giving  L  one-forth share  out  of the half-share of M. M died on  9th  January, 1962.  The Tribunal held that section 10 of the Estate  Duty Act was not attracted and the sum of Rs. 1,50,000 could  not be  included in the property passing on the death of M;  and the  High Court, on a reference, affirmed the viewes of  the Tribunal. This Court held affirming the decision of the High Court  that section 10 did not apply to the gifts of  Rs.  1 lakh  and Rs.50,000 made by the deceased to his son  and  to his wife respectively. But in that case, the question in the present  form  in which it arises before us in  the  instant case did not arise.     This  Court in the case of Badri Prasad Jagan Prasad  v. Commissioner  of Income-Tax, U.P., 156 I.T.R. 430  (judgment by  one of us) had occasion to refer to the effect  of  book entries but this question which is present before us in  the present  appeal was not before this Court in that  case.  No useful  purpose, therefore, will be served by  reference  to that case.     In  that view of the matter, except to the extent  indi- cated  above, the entries in the books of account could  not effectuate  gifts.  As we have discussed the  facts  on  the principles, we are of the opinion that the High Court was in error  in answering the question in the manner it  did.  The order  and  judgment  of the High Court  are  therefore  set aside.  All  the  questions are answered in  favour  of  the revenue.  As the respondent is not appearing, there will  be no order as to costs. N.P.V.                                                Appeal allowed. 133