1966 (9) TMI 140 - HC - Income Tax

Summary

Issues:
1. Inclusion of house property in the deceased's estate under the Estate Duty Act, 1953.
2. Inclusion of N.G.P. Notes value in the deceased's estate as property passing under section 13 of the Estate Duty Act, 1953.

Issue 1: Inclusion of House Property in Deceased's Estate:
The deceased purchased a house in the name of his son as a gift, with a recital in the sale deed reflecting this intention. The Estate Duty Officer contended that subsequent actions by the deceased, such as retaining rents and purchasing National Savings Certificates, indicated the property was benami and part of the deceased's estate. However, the court held that the property did not form part of the deceased's estate. The court emphasized that the property was legally transferred to the son as a gift, and the deceased did not have the power to dispose of the property. The recital in the will further supported the deceased's intention to gift the property, which was not negated by his subsequent conduct. The court's decision was influenced by a previous case where a similar scenario led to a property not being included in the deceased's estate.

Issue 2: Inclusion of N.G.P. Notes Value in Deceased's Estate:
The N.G.P. Notes purchased by the deceased were held jointly with his wife and daughters, with the interest credited to joint accounts. The Estate Duty Officer treated this amount as part of the deceased's estate. The court applied Section 13 of the Estate Duty Act, which deals with joint investments, and concluded that the deceased's ownership of the funds was not divested during his lifetime. The court referenced a previous case to establish that joint accounts in India do not presume advancement to the other holder and that the funds belonged to the deceased. The court rejected an argument to exclude a portion of the amount due to a closed account, as it was not raised before the Tribunal. Thus, the court upheld the inclusion of the N.G.P. Notes value in the deceased's estate.

In conclusion, the court ruled against the inclusion of the house property in the deceased's estate but upheld the inclusion of the N.G.P. Notes value. The judgment highlighted the legal transfer of the house property as a gift and the joint ownership of the N.G.P. Notes as key factors in determining their inclusion in the deceased's estate under the Estate Duty Act, 1953.