9911796707
|
Home
Issues:
Interpretation of section 10 of the Estate Duty Act in relation to trusts and gifts made by the deceased, exclusion of donor from possession and enjoyment of gifted property, application of s. 10 to deposits made by trustees, distinction between partnership property and individual ownership. Analysis: The High Court of Bombay was tasked with determining the application of section 10 of the Estate Duty Act in a reference made by the Incometax Appellate Tribunal concerning two trusts created by the deceased. The deceased had executed two deeds of trust appointing trustees to hold sums of Rs. 60,000 each for the benefit of his six daughters. The trustees invested these sums in the deceased's business, paying interest to the trustees. The Assistant Controller of E.D. held that the deceased was not entirely excluded from the benefit of the gifted properties, bringing them under the purview of s. 10. The Tribunal, however, held that s. 10 did not apply to the case, leading to the reference to the High Court. The court examined the provisions of s. 10, emphasizing the requirement that the donee must assume possession and enjoyment of the gifted property to the exclusion of the donor. The court referenced the Supreme Court's interpretation of s. 10 in previous cases, highlighting the need for the donee to retain possession entirely excluding the donor. The court noted that the deceased's return of the deposits to the trustees did not impact the analysis as it occurred within a year. The court discussed previous cases where gifts were invested in partnership firms and distinguished partnership property from individual ownership. It cited the Supreme Court's ruling that partnership property did not belong to a co-partner in the same way individual property did. In the present case, the deceased, as the sole proprietor of the business, enjoyed the benefit of the deposits, indicating non-exclusion from possession and enjoyment as required by s. 10. The court rejected arguments that the deposits constituted a debt incurred by the deceased, emphasizing that the deceased had control and use of the funds until their return. Ultimately, the court ruled in favor of the department, holding that the conditions of s. 10 were not met in the case, and the application of s. 10 was not excluded. The accountable persons were directed to pay the costs of the reference.
|
