1981 (2) TMI 48 - HC - Income Tax

Summary

Issues Involved:

1. Whether the entire value of the estate was taxable in the estate of the deceased.
2. Whether the wife of the deceased had any interest in the estate brought to tax.

Issue-Wise Detailed Analysis:

1. Taxability of the Entire Estate:

The accountable person claimed that only half of the estate belonged to the deceased and should be taxed accordingly. The Assistant Controller of Estate Duty taxed the entire estate, and this decision was upheld by the Appellate Controller and the Appellate Tribunal. The court examined the deed of partition dated July 25, 1957, between the deceased, his wife, and his two sons. The Tribunal concluded that the entire remaining properties, after allotting shares to the sons, belonged solely to the deceased, excluding the wife from any interest in the estate. The court referred to the recognition of the partition by the Income Tax Officer (ITO) under Section 25A of the Indian Income Tax Act, 1922, which indicated that the properties were divided into definite portions and the family status was severed.

2. Wife's Interest in the Estate:

The court analyzed whether the wife had any interest in the remaining properties after the partition. The document stated that the deceased and his wife were the sole owners of the remaining properties. The court noted that the ITO's recognition of the partition under Section 25A implied that the properties were divided, and the family status was severed. Consequently, the deceased and his wife held the properties as tenants-in-common. The court rejected the revenue's contention that the wife had no interest in the properties, emphasizing that the partition deed indicated joint ownership between the deceased and his wife.

Conclusion:

The court concluded that the deceased and his wife held the remaining properties as tenants-in-common, each having a half share. Therefore, only the deceased's half share passed on his death and was subject to estate duty. The Tribunal's decision to tax the entire estate was erroneous. The court answered the referred question in the negative, favoring the accountable person and against the revenue. The Controller of Estate Duty was ordered to pay the costs of the reference to the accountable person.