SRINIVASAN J.

The assessee is a firm which consisted of two partners, Abdul Kareem and his son, Abdul Gaffer Sahib. On the 31st March, 1953, Abdul Kareem made a declaration before the Masjeed Committee of Mahammadpara, whereunder he made certain gifts to his wife and children. In the books of the assessee, transfer entries were made on the same date, debiting the account of Abdul Kareem with these amounts and crediting the accounts of the above parties, the donees under the gifts. The cash balance on that date was not sufficient to enable Abdul Kareem to withdraw any amounts and make the gifts by way of cash. Following this, the constitution of the assessee firm underwent several changes. Besides Abdul Kareem and his eldest son, six other employees of the firm were taken in as partners. In the assessment year following these gifts, the accounts of the various parties to whom the gifts had been made figured as depositors in the accounts of the firm and interest was credited to their accounts. In the assessment year 1954-55, such interest was claimed as a deduction but was disallowed by the Income-tax Officer. This view was accepted by the Tribunal in due course. In the su