Law:

Section:

Section 4 of the Wealth-tax Act, 1957 - Net wealth to include certain assets - Assessment years 1964-65 to 1966-67 - Assessee who was carrying on business in his individual name, made gifts of certain sum in favour of his three sons by making entries in account books - No other document registered or otherwise had been executed by assessee in favour of his sons regarding alleged gifts - Besides, there was no evidence of acceptance of gift by donees - Whether, on facts, there was no valid gift made by assessee - Held, yes FACTS The assessee was an individual and he was carrying on the business in utensils. He made a gift of Rs. 28,000 each in favour of his three sons, the two of whom were minors, by debiting his own account with Rs. 84,000 and crediting Rs. 28,000 each in the accounts of his three sons. In subsequent years, income from interest on these amounts was also credited to the individual accounts of the sons. The assessee claimed deduction of interest on Rs. 84,000 credited to the accounts of his sons, but the said claim was rejected by the WTO. This order was confirmed by the AAC, who found that there was no evidence on record to show that the donees, especially the minors, had accepted the gifts, and that the assessee had not divested himself of Rs. 84,000 by merely making transfer entries in his books of account, while the said amount remained in his own business. As a result, he held that the gift was not a bona fide one. The Tribunal upheld that order. On reference : HELD "Gift" is defined in section 122 of the Transfer of Property Act, 1882. It is the transfer of certain existing movable or immovable property made voluntarily and without consideration by one person to another and accepted by or on behalf of the latter. Such acceptance has to be made during the lifetime of the former and while he is still capable of giving. Section 123 of the same Act mentions the method by which the gift is effected. In the case of a gift of immovable property, the transfer has to be made by a registered instrument signed by or on behalf of the donor and attested by at least two witnesses. If the property gifted is movable, then the transfer is effected either by…

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