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Issues Involved:
1. Whether the deceased's current account with the controlled company constituted a "transfer" of property. 2. Whether the withdrawals from the current account constituted "benefits" or "periodical payments" under Rule 5 of the Estate Duty (Controlled Companies) Rules, 1953. 3. The correct application of the "slice principle" under Section 17 of the Estate Duty Act for determining the estate duty liability. Detailed Analysis: 1. Transfer of Property: The deceased maintained a current account with a private limited company, which was deemed a "controlled company" under Section 17 of the Estate Duty Act. The Assistant Controller of Estate Duty concluded that the amount credited to the deceased's current account should be treated as a "transfer" of property to the company. The accountable person initially objected but later conceded that the current account did amount to a transfer of property, acknowledging the broad definitions of "transfer" in the statute and rules. 2. Benefits or Periodical Payments: The primary contention was whether the withdrawals from the deceased's current account could be considered "benefits" or "periodical payments" under Rule 5 of the Estate Duty (Controlled Companies) Rules, 1953. The Assistant Controller relied on Rule 5(1)(a), which defines a benefit as "any periodical payment" out of the company's resources received by the deceased for his benefit. The Tribunal initially ruled that the withdrawals were not "periodical payments" but rather a "single lump sum payment." However, this reasoning was flawed as the withdrawals were made at different times in varying amounts, contradicting the definition of a "single lump sum." The court clarified that Rule 5(2) requires payments to be part of a "series" to be considered periodical. The term "series" implies a number or set of payments of one kind, either continuously or at regular intervals. The rule allows for some flexibility, such as payments not needing to be interconnected or of identical amounts, but they must still form a series. The court found that the deceased's multiple withdrawals did not constitute a "series" of payments within the meaning of Rule 5(2). Consequently, Rule 5(1)(a) could not be applied to regard these payments as benefits under Section 17 of the Estate Duty Act. 3. Application of the Slice Principle: The "slice principle" under Section 17 of the Estate Duty Act was used to determine the estate duty liability on the controlled company's assets. The Assistant Controller calculated the net assets of the controlled company at Rs. 4,11,319 and the total income over three years at Rs. 6,12,020. The deceased's withdrawals amounted to Rs. 3,92,066. Using the slice principle, the estate duty liability was calculated as follows: \[ \frac{3,92,066}{6,12,020} \times 4,11,319 = Rs. 2,63,495 \] This amount was included in the dutiable estate. However, given the court's conclusion that the withdrawals did not constitute "benefits" or "periodical payments," the Rs. 2,63,495 could not be included as part of the dutiable estate. Conclusion: The court reframed the question of law to better reflect the real controversy and concluded that Rs. 2,63,495 was properly excluded from the dutiable estate. The answer to the reframed question was in the affirmative and in favor of the accountable person, with the Department ordered to pay the costs of Rs. 500. Reframed Question of Law: "Whether, on the facts and in the circumstances of the case, Rs. 2,63,495 was properly excluded by the Tribunal from the dutiable estate as not being liable to be charged to estate duty under section 17 of the Estate Duty Act, read with rule 5 of the Estate Duty (Controlled Companies) Rules, 1953?" Answer: The answer to the reframed question is in the affirmative and in favor of the accountable person.
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