S.P. Goyal, J.
1. The following question of law arising out of order dated December 21, 1976, in Income-tax Appeal No. 83 of 1976-77 has been referred to this court under Section 256(1) of the I.T. Act, 1961 :
' Whether, on the facts and in the circumstances of the case and on an application of correct legal principles, the Tribunal was justified in law in holding that the assessee was not entitled to exemption under Section 11 of the Income-tax Act, 1961 '
2. The facts found and mentioned in the statement of the case are that the assessee is a trust registered under the Societies Registration Act, 1860. The assessment in issue relates to the year which ended on March 31, 1971. The amount of Rs. 40,000, Rs. 10,000 by each of the four partners of the firm M/s. Cheru Lat Bal Chand, was donated to this trust ; Rs. 20,000 in equal proportion were debited to the accounts of Shankar Lal and Lalit Mohan and credited to the account of the turst in the books of the firm on March 23, 1971. Similarly, a sum of Rs. 10,000 was debited to the account of Parshotam Lal on March 26, 1971, another sum of Rs. 10,000 to the account of Bal Chand on March 27, 1971, and credited to the account of the trust. In the balance-sheet of the trust relating to the period ending March 31, 1971, the aforesaid amount of Rs. 40,000 was added to the general funds and shown as donations receivable.
3. At the time of assessment, the assessee claimed that the said amount was exempt under Section 11 of the I.T. Act. However, the ITO did not allow it holding that the provisions of Section 13(2)(h) become operative because the sum of Rs. 40,000 donated by the four partners remained invested in the firm in which they were partners. On appeal, the AAC held that as the actual amount was later on handed over to the trust in two instalments of Rs. 20,000 each on April, 10 and 15, 1971, respectively, it could not be said that the amount remained invested with the firm and allowed the claim of the assessee. The order of the AAC was reversed by the Tribunal which led to this reference at the instance of the assessee. As an identical question is involved in another reference (I.T.R. No. 165 of 1979) by the assessee which relates to the subsequent year, the same shall also be disposed of by this order.
4. The only contention raised by Mr. R. C. Setia, the learned counsel for the assessee before us, was that no completed gift came into being in the present case by the close of the relevant year. It was argued that according to the provisions of Section 123 of the Transfer of Property Act, a gift of movable property can be made either by a registered instrument or by the delivery of the property. In the present case only book entries were made prior to March 31, 1971, and actual money was delivered to the trust only in the month of April, 1971. By making book entries, it cannot be said that the money, subject-matter of the gift, was delivered to the trust and, therefore, the gift was not completed till the month of April, 1971. In support of his contention, the learned counsel relied on Sukhlal Sheo Narain v. CWT . In that case, the assessee claimed to have made a gift of Rs. 28,000 each in favour of his three sons, 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. It was held that no valid gift had been made by the assessee because by such entries alone, the assessee had not divested himself of his property and the donees had not become full owners thereof. The case is obviously distinguishable on facts. As there was no acceptance of the gift on behalf of the donees, a completed gift could not come into being. The question as to whether the delivery of the money could be effected by making debit and credit entries in the account books, therefore, did not strictly arise in that case. But even then it was observed by the Bench that the case of a partnership firm would be distinguishable from the case of a sole proprietor of the business because in the case of a partnership firm where the donor is one of the partners he would not be able to change entries in the account books as and when he chooses to do so.
5. In the present case, the entries had been made in the account books of the firm at the instance of the donors whereby the amount in dispute was debited in their account and credited in the account of the trust. The information of the gift, it is evident, was duly given to the management of the trust who also made entries to that effect in their balance-sheet as stated above. The amount had actually been delivered also to the trust within a month. The making of the gift was communicated and the same was duly accepted by the donees. So far as Section 123 of the Transfer of Property Act is concerned, it required that movable property, the subject-matter of the gift, has to be delivered in the same manner as the goods sold are delivered to the buyer. Section, 26 of the Sale of Goods Act says that delivery of goods sold may be made by doing anything which the parties agree shall be treated as delivery or which has the effect of putting the goods in the possession of the buyer or any person authorised to hold them on his behalf. In the present case, the moment the credit entries had been made in the name of the trust, the amount, subject-matter of the gift, would be deemed to have been put in possession of the buyer as the firm henceforth would be holding money only as a debtor or on behalf of and for the benefit of the trust. The fact that the amount has been shown as recoverable in the balance-sheet of the trust would further show that the parties had agreed to the arrangement that the amount shall be allowed to remain with the firm till it was demanded and paid to the trust. We are fortified in our view by another Division Bench decision of this court in Balimal Nawal Kishore v. CIT and the Supreme Court decision in CED v. Kamlavati : 120ITR456(SC) , where a gift of the cash amount made through debit and credit entries in the accounts books was uphold.
6. Consequently, the question in both the references referred to above is answered in the affirmative. No costs.
7. I agree.