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Issues:
1. Applicability of section 10 in respect of a gift of Rs. 1,20,000. 2. Determination of the share of the value of goodwill of a firm passed on to the accountable person. Analysis: The judgment delivered by the High Court of Bombay pertains to a case under the Estate Duty Act, 1953, where two questions were raised for the court's opinion. The first issue revolved around whether section 10 applied to a gift of Rs. 1,20,000 made by the deceased to his sons. The court referred to a previous Division Bench judgment to establish that the deceased was entirely excluded from the gifted amounts, leading to the conclusion that section 10 did not apply, and the sum could not be included in the estate's value. Regarding the second issue, the court analyzed the partnership formed between the deceased and his sons after the gift. The taxing authorities had contended that the sons' share in the firm's goodwill was a result of the gifted sum and thus attracted section 10. However, the court disagreed, emphasizing that since the sons had absolute ownership of the gifted amounts and had contributed identical sums to the partnership, their shares in the goodwill did not pass on the deceased's death. The court also highlighted a previous ruling that recognized the legitimate consideration for a father taking his son as a partner in such circumstances. In conclusion, the High Court ruled in favor of the accountable persons on both questions. The court held that section 10 did not apply to the gifted amount and that the sons' share in the firm's goodwill did not pass on the deceased's death. The department was directed to bear the costs of the reference.
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