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Issues:
1. Inclusion of cash gifts in the estate under the Estate Duty Act. 2. Determination of whether settlement of property is subject to estate duty inclusion. Analysis: 1. The deceased made cash gifts of Rs. 10,950 each to his sons and relatives, totaling Rs. 43,800, before converting his proprietary concern into a partnership. The Revenue authorities contended that these gifts should be included in the estate under section 10 of the Estate Duty Act. However, the Tribunal held that the gifts were absolute, forming the donees' capital contribution in the partnership, and therefore not subject to section 10. The High Court agreed, emphasizing that the gifts were completed and unrestricted, with the donor retaining no rights over the money after gifting it. The court distinguished cases involving actionable claims, stating that the proprietary concern's capital account did not fall under that category. Consequently, the sum of Rs. 43,800 was deemed includible in the estate. 2. Regarding the settlement of a house on the deceased's minor son, valued at Rs. 65,000, the Revenue argued for its inclusion in the estate. The High Court disagreed, noting that the settlement occurred after the partnership was formed, and the partnership continued its business in the premises. As the settlement did not restrict the partnership's rights to the property, the court held that the property was not subject to estate duty inclusion under section 10. The court distinguished a Supreme Court case where a similar gift included both property and business, leading to estate duty application. In this case, the settlement did not exclude the partnership's rights, resulting in the property's exclusion from the estate valuation. Therefore, the sum of Rs. 65,000 was deemed not liable for inclusion in the estate. Ultimately, the court found in favor of including the cash gifts but excluding the settled property from the estate valuation, leading to no clear success for either party in the reference.
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