2001 (9) TMI 22 - HC - Income Tax

Estate Duty, Passing Of Property, Deduction - Tribunal, after having held that the material on record does not show anything to connect the amount derived by the deceased s wife by way of gift, with the subsequent loan advanced by her the gift of Rs.30,000 having been made in the year 1960 and the loan of Rs.1,09,423 having been advanced to the deceased five years later--the Tribunal has nevertheless proceeded to hold that section 46 of the Estate Duty Act, 1953, was attracted and, therefore, part of the debt outstanding may not be regarded as having abated to the extent of the amount that had been gifted in 1960 - Learned counsel referred to a number of decisions of this court to show that there should have been nexus between the resources and the loan. That proposition is practically self-evident. We, therefore, answer the question referred to us regarding the correctness of the Tribunal s holding that section 46 is attracted to the gift of Rs.30,000 in favour of the assessee. - So far as the question regarding the holding of the Tribunal that the estate duty payable was not liable for deduction in computing the dutiable estate, that question must necessarily be answered, in the light of the declaration by the Supreme Court in the case of Nawab Mir Barkat Ali Khan Bahadur v. CED, in favour of the Revenue and against the assessee.

Summary

The High Court of Madras ruled that Section 46 of the Estate Duty Act was not applicable as there was no evidence connecting a gift received by the deceased's wife with a subsequent loan given to the deceased. The court emphasized the need for a nexus between resources and loans. The judgment favored the Revenue in terms of estate duty deduction.