9911796707
|
Home
Issues Involved:
1. Inclusion of Rs. 17,761 in the principal value of the estate. 2. Exclusion of Rs. 2,923 and Rs. 47,077 from the principal value of the estate under sections 46(1)(b) and 46(2) of the Estate Duty Act. Issue-wise Detailed Analysis: 1. Inclusion of Rs. 17,761 in the Principal Value of the Estate: The first issue concerns whether the sale proceeds of a house property credited in the books of the firm as a charity account should be included in the deceased's estate. The Assistant Controller argued that the credit balance was not a real liability and should be added when evaluating the deceased's half share in the partnership firm, M/s. Manilal and Sons. The Appellate Controller agreed, stating that the partnership firm had full control over the amounts until they were disbursed or utilized for charitable purposes. However, the Tribunal held that the legal ownership of the fund vested in the trust as the deceased's father credited the profits for a specific charitable purpose, imposing an obligation to utilize it for charitable purposes. Consequently, the amount should not be included in the dutiable estate of the deceased. The Tribunal's decision was upheld by the High Court, referencing the Supreme Court's ruling in CIT v. Tollygunge Club Ltd. [1977] 107 ITR 776 (SC), which established that a trust could be created by any language sufficient to show the intention, even without technical words. 2. Exclusion of Rs. 2,923 and Rs. 47,077 from the Principal Value of the Estate: The second issue involves the exclusion of Rs. 2,923 and Rs. 47,077 under sections 46(1)(b) and 46(2) of the Estate Duty Act. The deceased had taken a loan of Rs. 60,500 from his son and gifted Rs. 50,000 to him. The Assistant Controller included Rs. 2,923 as a liability under section 46(1)(b) and Rs. 47,077 under section 46(2) as property passing on the death of the deceased. The Appellate Controller confirmed these conclusions. The Tribunal, however, directed the exclusion of these amounts, citing the High Court's decision in Mrs. Ratnakumari Kumbhat v. CED [1975] 101 ITR 572. The High Court held that the interest paid on the loan could not be included in the estate, as the future interest payable on the loan could not constitute the consideration for the debt. Regarding the Rs. 47,077, the High Court noted that section 46 imposes limitations on deductions allowable under section 44 to prevent avoidance of duty by disposing of property and borrowing it back. The Full Bench of the High Court in CED v. Sileshkumar R. Mehta [1990] 181 ITR 10 clarified that the consideration given for the debt could be either before or after the loan, and the nexus between the loan transaction and the property derived must be established. In this case, the Department failed to establish the nexus between the loan taken and the gift made by the deceased. Therefore, the sum of Rs. 47,077 could not be taken as property passing on the death of the deceased under section 46(2) of the Act. Conclusion: The High Court answered both questions in the affirmative and against the Department, affirming the Tribunal's decision to exclude the amounts in question from the principal value of the estate. The accountable person was entitled to costs, with counsel's fee fixed at Rs. 500.
|
