2003 (7) TMI 8 - HC - Income Tax

Estate Duty Act, 1953 Passing of Property - Whether, Tribunal is justified in holding that the estate left by the deceased belonged to the Hindu undivided family and only value of 1/4th share therein is assessable to estate duty in the hands of the accountable person? - Whether, Tribunal is justified in holding that the assets (cash in hand, money in hand, amount due in insurance policies) left by the deceased were not his personal assets? - we answer the first question in affirmative, i.e., in favour of the accountable person, and against the Revenue. With regard to second question, we answer that the cash in hand and money in bank that belongs to the deceased in his individual capacity and is subject to estate duty. The amount due in the insurance policy does not belong to the deceased in his individual capacity, therefore, not subject to estate duty

Summary

Issues:
1. Whether the estate left by the deceased belonged to the Hindu undivided family or his individual capacity.
2. Whether the cash in hand, money in bank, and amount due in the insurance policy belonged to the deceased in his individual capacity or to the Hindu undivided family.

Analysis:

Issue 1:
The Tribunal considered whether the estate left by the deceased belonged to the Hindu undivided family or his individual capacity. The Appellate Tribunal had held that only 1/4th share of the estate was assessable to estate duty as it belonged to the Hindu undivided family. This decision was based on previous findings that the properties inherited by the accountable person from his deceased father were ancestral properties, making them part of the Hindu undivided family property. The Tribunal confirmed this view, stating that once it was established that the property belonged to the Hindu undivided family, it could not be considered in individual capacity for estate duty purposes. The Tribunal found no error in this view, as the status of the deceased as part of the Hindu undivided family had been previously accepted and finalized.

Issue 2:
Regarding the assets of cash in hand, money in bank, and amount due in the insurance policy, the dispute arose whether these belonged to the deceased in his individual capacity or to the Hindu undivided family. The Tribunal determined that the cash in hand and money in bank were personal assets of the deceased, considering his modest income as an MLA and MP. However, for the insurance policy amount, the Tribunal concluded that since the premium was paid from estate income belonging to the Hindu undivided family, the amount due in the insurance policy also belonged to the family. The Tribunal clarified that the insurance amount payable on the death of the deceased did not constitute his personal assets subject to estate duty, as it directly passed to the beneficiaries without succession issues. Consequently, the Tribunal ruled that the cash in hand and money in bank were subject to estate duty as personal assets of the deceased, while the insurance policy amount was not liable for estate duty as it belonged to the Hindu undivided family.

In conclusion, the Tribunal ruled in favor of the accountable person for Issue 1, stating that the estate belonged to the Hindu undivided family. For Issue 2, the Tribunal decided that the cash in hand and money in bank were personal assets subject to estate duty, while the insurance policy amount did not belong to the deceased in his individual capacity and was not liable for estate duty. The reference was disposed of accordingly.