HAZARIMAL HIRALAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference made under s. 66 of the Indian IT Act by the Tribunal at the instance of the assessees. The question formulated for the opinion of the Court is as follows :

(2.) THE assessee were a firm, Hazarimal Hiralal. It is a registered partnership consisting of three partners carrying on an extensive business as importers of piece-goods. One of the partners, Bhudarmal, died and as usual in Marwari partnership, he was succeeded by his son, Hulaschand, who, being a minor, was admitted to the benefits of partnership in place of his father. Later Hulaschand was married and in 1932 he had one daughter of the name of Kamala Bai, his wife's name being Mst. Jabbar. It was found that in the year 1935 Hulaschand's capital account with the firm stood at about rupees twenty lacs. In the month of September, 1935, Hulaschand's wife, Mst. Jabbar who was expecting a child became seriously ill and on her recovery she apparently requested her husband to give her some money as a gift so that she could spend the money on charity and make provision for her child. On 18th Sept., 1935, Hulaschand withdrew a sum of Rs. 4,80,000 from the firm and made a gift of Rs. 4,80,000 in cash and Rs. 20,000 worth debentures to his wife. This gift was made in the presence of two employees named Chaganlal Kochar and Ratanlal Kochar. THE entries in the books of the firm show that the withdrawal was made from the funds of the firm for the purposes of this gift. On 24th Sept., 1935, a sum of Rs. 4,50,000 was deposited with the firm of Hazarimal Hiralal in the name of the donee Mst. Jabbar and the remaining Rs. 30,000 out of the gift of Rs. 4,80,000 was deposited with the firm known as Mulchand Jeskaran. Apparently there is nothing on the record to show what happened to the debentures.

(3.) THE Tribunal came to the conclusion that a gift was actually made. THE Tribunal was satisfied that Mst. Jabbar who was ill and afraid of what might happen in her confinement, was anxious to make some provision for her child. It appears that Mst. Jabbar's mother had died in her second confinement. THE Tribunal appears to have been of opinion that Mst. Jabbar was naturally anxious to make some provision for her children as she feared that her husband might remarry after her death. THE Tribunal thought that this was a very natural fear on the part of Mst. Jabbar and that as her husband was a good and kindly man and wanted to please his wife he gave her the money she wanted as he, in the words of the Tribunal, "was pretty sure that she would not waste it or alienate it against his wishes." THE Tribunal then added :