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Issues involved: Assessment of estate duty on refunds received after the death of the deceased, interpretation of "property passing on the death" u/s 2(16) of the Estate Duty Act, 1953, and applicability of estate duty u/s 5 of the Act.
Assessment of Estate Duty on Refunds: The deceased, Maharaja Pateshwari Prasad Singh, had refunds of Rs. 8,47,034 payable to him post his death due to revision of income-tax and wealth-tax assessments. The Assistant Controller of Estate Duty issued a notice u/s 61 of the Act to include the refunds in the estate value. The accountable person contended that as the deceased had blended his properties with the Hindu undivided family, no estate duty was applicable on the refunds received after his death. Interpretation of "Property Passing on Death" u/s 2(16): The Assistant Controller held that refunds related to taxes paid by the deceased individually were part of his individual estate, while refunds related to taxes paid from Hindu undivided family funds were partially includible. The appellate authority disagreed with the inclusion of the entire refund amount in the estate value, except for a specific refund for the assessment year 1959-60. Applicability of Estate Duty u/s 5: The accountable person argued that the refunds received after the death of the deceased could not be considered as property passing on his death u/s 5 of the Act. They contended that for estate duty to apply, the deceased must have possessed or enjoyed a property interest that was ascertainable during his lifetime, which was not the case with the posthumous refunds. The court agreed that no property passed on through the deceased in this scenario, hence no estate duty was payable. In conclusion, the court ruled in favor of the accountable person, stating that the refunds received after the death of the deceased were not subject to estate duty as they did not constitute property passing on his death. The court referred to a Supreme Court decision regarding the nature of movable property for further clarification. The accountable person was awarded costs of the reference.
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