1. In this case the assessee claimed a loss of Rs. 2,62,492 in share dealings for the assessment year 1950-51, which corresponds to the previous accounting year of the assessee ending on the 31st October, 1949. Out of this amount the loss of Rs. 2,12,540 was attributed to the alleged sale by the assessee of certain shares to Bharatiya Gyan Pith, Kashi, which is a charitable institution. In the accounting year ending on the 31st October, 1948, the assessee introduced into his accounts the shares valued at Rs. 5,07,930, crediting this sum to his capital account. Simultaneously a debit entry was made in his accounts of Rs. 3,00,000 as donation to Bharatiya Gyan Pith, and a corresponding credit entry was made in the newly opened account styled as “Bharatiya Gyan Pith Account”. No cash payment in relation to this credit entry was made to that charitable institution in that year. But in the accounting year ending on the 31st October, 1949, the assessee debited the credit entry in the name of the charitable institution with a sum of Rs. 3,00,000 which represented the then value of the shares held in the books at Rs. 5,07,930. On behalf of the assessee it was contended before the Income-tax Officer that he had become indebted to the charitable institution in the accounting year 1947-48 to the extent of Rs. 3,00,000, being his donation to the charitable institution and that he discharged this liability in the accounting year 1948-49 by selling to the charitable institution shares originally acquired for Rs. 5,07,930 at their then market value of Rs. 2,95,390. The Income-tax Officer rejected the claim of the assessee on the ground that the assessee merely made a donation of the shares in specie and no question of business loss arose from the transfer of the shares. The Appellate Assistant Commissioner agreed with the Income-tax Officer's finding. Before the Income-tax Appellate Tribunal it was submitted on behalf of the assessee that there was a debt to the extent of Rs. 3,00,600 from the assessee to the charitable institution as a result of the entries in his books on the 31st October, 1949. It was contended that the assessee transferred the shares in discharge of his debt and the transaction was tantamount to a sale and the assessee was entitled to the loss of Rs. 2,12,540 as a revenue loss. The Tribunal rejected the claim of the assessee and held that the transfer of the shares to the charitable institution in the accounting year 1948-49 was not tantamount to a sale and the assessee was not entitled to claim a loss of Rs. 2,12,540 as a revenue loss arising from his share business.

2. Under section 66(1) of the Indian Income-tax Act the Appellate Tribunal has stated a case for the determination of the High Court on the following question of law:

“Whether on the facts and in the circumstances of the case the loss of Rs. 2,12,540 is allowable as a revenue loss arising from the assessee's share business?”

3. On behalf of the assessee learned counsel put forward the argument that there was a valid gift of Rs. 3,00,000 to the Bharatiya Gyan Pith in the accounting year 1947-48 by the assessee and in lieu of actual payment of cash the liability of the assessee was discharged by him in the subsequent accounting year by transfer of the shares in question. It was, therefore submitted that there was a valid sale of the shares in the eye of law in the accounting year 1948-49 and the assessee was entitled to claim the allowance of Rs. 2,12,540 as revenue loss arising out of his share business. We are unable to accept this argument as correct. The Appellate Assistant Commissioner has found that the essential conditions of sale are lacking in this case, that no consideration was received by the assessee on transfer of his shares to the donee but the shares in question were merely transferred by the assessee to the donee by way of charity. The same view has been expressed by the Appellate Tribunal which also held that no cash was paid at the time of the alleged donation of Rs. 3,00,000 by the assessee to the charitable institution but there was merely a book entry in the assessee's accounts. It was also held by the Appellate Tribunal that there was no delivery of the sum of Rs. 3,00,000 to the institution and at best what the assessee did was to express his pious intention of helping the charitable organisation. In other words, the finding of the Appellate Tribunal is that there was no acceptance of the gift by the Bharatiya Gyan Pith in the accounting year 1947-48. In our opinion the Appellate Tribunal has addressed itself correctly in law on this point and there was no debt created in favour of the Bharatiya Gyan Pith in the accounting year 1947-48 merely because of the book entry made by the assessee in his accounts for that year. If there was no debt in favour of the charitable institution and there was no liability incurred by the assessee to the charitable institution in the accounting year 1947-48, it is manifest that the transfer of shares in the accounting year 1948-49 was not a transfer made to the charitable institution in consideration of a previous liability and the transaction is not tantamount to a sale of shares in the eye of law. The true legal position is that a gift of immovable property may be effected either by a registered deed or by delivery of possession. The law on the subject has been reviewed by Fry and Bowen L. JJ. in Cochrane v. Moore 1890 25 Q.B.D 57.. In the course of their judgment, they stated as follows:

“… according to the old law no gift or grant of a chattel was effectual to pass it whether by parol or by deed, and whether with or without consideration unless accompanied by delivery: that on that law two exceptions have been grafted, one in the case of deeds, and the other in that of contracts of sale where the intention of the parties is that the property shall pass before delivery: but that as regards gifts by parol, the old law was in force when Irons v. Smallpiece 1819 2 B. & A. 551. was decided: that that case, therefore, correctly declared the existing law.

4. In the same case Lord Esher M.R also observed:

“… in ordinary English language, and in legal effect, there cannot be a ‘gift’ without a giving and taking. The giving and taking are the two contemporaneous reciprocal acts which constitute a ‘gift’. They are a necessary part of the proposition that there has been a ‘gift’. They are not evidence to prove that there has been a gift, but facts to be proved to constitute the proposition that there has been a gift.”

5. The legal position in India is not different. Under section 123 of the Transfer of Property Act a gift of movable property may be effected either by a registered instrument or by delivery. Under section 122 of the Transfer of Property Act there must be acceptance on the part of the donee, and without such acceptance there is no valid gift. As we have already pointed out, there was no evidence produced by the assessee to show in this case that there was acceptance of the gift by the Bharatiya Gyan Pith in the accounting year 1947-48 and there was also no evidence produced by the assessee to indicate that in the account of the Bharatiya Gyan Pith the amount of Es. 3,00,000 has been credited as a gift made by the assessee. In this connection the decision of the Privy Council in Hariram Serowgee v. Madan Gopal Bagla A.I.R 1929 P.C 77. is relevant. In that case one Brijoomari carried on business on her own account and maintained account books. In 1896 she opened an account in the name of her granddaughter. This account was continued down to the granddaughter's death in 1904. In 1901 this account was credited with a sum of Rs. 2,00,000 and in 1903 with a further sum of Rs. 31,000. It was alleged that these were gifts to the granddaughter by the grandmother. There was no evidence that the granddaughter ever knew what was done by the grandmother and the account was never operated upon. In these circumstances the Judicial Committee held that the accounts were themselves mere book entries and did not confer or determine rights. Whatever else they showed they did not show completed gifts to the granddaughter. This decision was followed by the Madras High Court in Mrs. Ida L. Chambers v. Kelland Huxford Chambers. In that case one G, the sole proprietor of a company, got certain entries made in the company's account books crediting his wife with certain items after debiting them to his capital account as G was not in a position to make a gift in cash as his assets were represented by land, buildings and stock-in-trade. A separate account was thus opened in the wife's name. G then wrote to the company to credit some more items to his wife's account. The credits bore interest at a particular rate. G also instructed the company to inform his wife that amounts so credited were in the nature of personal gifts to her but subject to certain restrictions as to the realisation of the gifts. The wife was actually paid interest on these amounts standing to her credit. In this State of facts it was held by Leach C.J and Horwill J. that the entries in the books did not complete the gifts and what the law required for completion was never carried out, that is to say, a registered deed or delivery of possession. Learned counsel for the assessee referred to a decision of the Bombay High Court in Chimanbhai v. Commissioner of Income-tax in support of his argument. In that case the assessee made a gift of Rs. 5,00,000 to his son, S, and Rs. 2,00,000 to his daughter, P, on the 17th November, 1952, and he made the necessary entries in his account books on that date. On the 8th November, 1953, he instructed the joint family firm, which acted as his banker and with which he had an account, to debit him with the two sums and interest earned up to that date and credit the accounts of S and P with the corresponding amounts. The firm carried out the instructions and submitted a voucher which the assessee signed. In this State of facts it was held by the Bombay High Court that there was a valid and complete gift of shares by the assessee in favour of his son and daughter and so the interest on the amounts transferred to his son and daughter could not be included in the income of the assessee. In the present case the material facts are different and the principle of the Bombay decision cannot be applied. It is necessary to state that in the Bombay case there was not only entries made with regard to the gift in the books of the assessee but there was a letter of instruction given by the assessee to his banker to credit the accounts of his son and daughter with the corresponding amounts of his gift and to debit his account with an equal sum. There was also proof that the bank carried out the instructions and submitted a voucher which the assessee signed. It was also proved in the Bombay case that the son and daughter also drew upon their accounts in respect of the two amounts which were gifted to them by their father and credited to their accounts. It is manifest that the facts of the present case are different and the ratio of the Bombay case cannot be applied to the present case. In our opinion the present case falls within the ambit of the principle enunciated by the Privy Council decision in Hariram Serowgee v. Madan Gopal Bagla and by the Madras decision in Mrs. Ida L. Chambers v. Kelland Huxford Chambers. It follows, therefore, that there was no valid gift of the amount of Rs. 3,00,000 made by the assessee to the Bharatiya Gyan Pith in the accounting year 1947-48. If that is the correct legal position, it must be held that there was no sale of the shares in the accounting year 1948-49 by the assessee in discharge of any previous liability to the Bharatiya Gyan Pith. For these reasons we hold that in the facts and circumstances of this case the loss of Rs. 2,12,540 cannot be allowed as a revenue loss arising from the assessee's share business. We accordingly answer the question of law referred by the Income-tax Appellate Tribunal against the assessee and in favour of the income-tax department. The assessee must pay the costs of this reference. Hearing fee Rs. 250.