Supreme Court of India
Gulab Rai Govind Prasad vs Commissioner Of Income Tax, U.P., ... on 23 January, 1987
Equivalent citations: [1987]165ITR163(SC), 1987(SUPP)SCC337, AIRONLINE 1987 SC 278
Bench: S. Natarajan, Sabyasachi Mukharji
ORDER
1. Civil Appeal No. 1164 of 1974 : 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 a valid gift and the amount was liable to be excluded from the wealth of the Hindu undivided family. Thereafter, there was a reference to the High Court under Section 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 October 6, 1954, was only Rs. 7,626, although it had assets of about Rs. 7 lakhs in the form of negotiable securities, etc. The Tribunal also recorded a finding that Rs. 2 lakhs was gifted only by entries in the books of account. It was found further that no interest was ever paid to Tej Prakash from October 6, 1954, until October, 1963, when a sum of Rs. 12,852 was credited by way of interest in the account of Tej Prakash. It was further found as the High Court noted that the amount of gift was never utilised by Tej Prakash for any purpose of his own, but was available and was utilised for business of the Hindu undivided family. 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 a 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, the donor and the donee, and there-was no acceptance of the gift on behalf of the donee. On these facts found by the Tribunal, the High Court came to the conclusion that, in the facts of the case, "there was no gift in fact made by Shri Kishan Das to Tej Prakash". In the circumstances, the High Court was of the opinion that the sum of Rs. 2 lakhs cannot be excluded from the computation of the wealth of the Hindu undivided family. The question whether there could be a valid gift by entries in books of account of the Hindu undivided family where there was no sufficient fund belonging to the firm in view of the circumstances of the case 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. Civil Appeal No. 1165 of 1974 : This appeal arises out of the assessment to income-tax for deduction of the interest paid in the background of the facts narrated in the order in C.A. No. 1164 of 1974. In view of the said decision and findings of the High Court that the gift in favour of Tej Prakash was not valid, the amount of the gift was all along the property of the Hindu undivided family. 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.