1980 (12) TMI 28 - HC - Income Tax

Summary

Issues:
- Whether the shares of Delhi Cloth and General Mills Co. Ltd. were deemed to pass on the deceased's death under section 13 of the Estate Duty Act.

Analysis:
The case involved a reference on estate duty at the instance of the accountable persons regarding the 6,067 shares owned by the deceased in a company. The deceased had divided the shares among her sons before her death, with some shares jointly registered. The accountable persons argued that the shares were outside the scope of estate duty as they were not competent to dispose of them without the joint owner's consent. However, the authorities held that the shares were deemed to pass on the deceased's death under section 13 of the Act.

The main contention raised by the accountable persons was that the deceased lacked the capacity to dispose of the shares individually, thus section 6 of the Act should not apply. They also argued that sections 9 and 10 regarding gifts were not applicable, and section 13 did not apply as there was no trust arrangement or survivorship direction. However, the Tribunal upheld the inclusion of the shares in the estate based on the provisions of section 13, equating joint ownership of shares to joint bank accounts.

The court analyzed the relevant sections of the Estate Duty Act, emphasizing section 13 which applies to joint investments. The court highlighted the three conditions under section 13, which were satisfied in this case: the deceased's absolute ownership of the shares, the transfer of shares to joint names, and the passing of beneficial interest to the sons upon the deceased's death. Referring to case law on joint holdings, the court cited precedents where joint accounts and certificates were held to be includible in the estate under section 13.

Based on the fulfillment of all requirements under section 13, the court ruled in favor of the department, affirming that the shares were deemed to pass on the deceased's death and were subject to estate duty. The accountable persons were directed to bear the costs, including counsel's fee.