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1973 (2) TMI 52 - SC - Income TaxWhether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the house property in Avanashi Road ,Coimbatore, is not liable to estate duty as property deemed to pass on the death of the deceased under section 10 of the Estate Duty Act, 1953 ? . Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the sum of ₹ 1 lakh gifted by the decreased to his sons in 1953, is not liable to estate duty as property deemed to pass on the death of the deceased under section 10 of the Estate Duty Act, 1953 ? Held that - Neither the property gifted to the donees, nor the amount of Rs. one lakh gifted to the five sons, could be included in the estate of the deceased. The appeal is accordingly dismissed
Issues Involved:
1. Whether the house property in Avanashi Road, Coimbatore, is liable to estate duty under section 10 of the Estate Duty Act, 1953. 2. Whether the sum of Rs. 1 lakh gifted by the deceased to his sons in 1953 is liable to estate duty under section 10 of the Estate Duty Act, 1953. Issue-wise Detailed Analysis: 1. House Property in Avanashi Road, Coimbatore: The primary issue is whether the house property transferred by the deceased to his sons is liable to estate duty under section 10 of the Estate Duty Act, 1953. The deceased had transferred the property to his sons via a deed of settlement in August 1953, and the firm, in which the deceased was a partner, continued to occupy the property as a tenant-at-will, paying rent to the donees. The Assistant Controller of Estate Duty included the property in the estate of the deceased, arguing that possession and enjoyment of the property had not been assumed by the donees to the exclusion of the donor. The Tribunal and the High Court held that the firm occupied the property as a tenant and not as an owner, and thus the gift was made without the donor retaining any interest. The Supreme Court agreed with this view, stating that the donor had transferred ownership subject to the tenancy, and the possession given was the legal possession which the nature of the property admitted. The benefit the donor had as a partner in the firm was not referable to the gift. The court concluded that the property could not be included in the estate under section 10 of the Act. 2. Sum of Rs. 1 Lakh Gifted to Sons: The second issue concerns whether the sum of Rs. 1 lakh, transferred by the deceased to his sons in 1953, is liable to estate duty under section 10 of the Estate Duty Act, 1953. The deceased had requested the firm to transfer Rs. 20,000 each to the accounts of his five sons, and the amounts continued to be invested in the firm, earning interest at 7.5% per annum. The Assistant Controller included this sum in the estate, arguing that the donees had not been in possession and enjoyment of the gift to the exclusion of the donor. The Tribunal and the High Court disagreed, holding that the sons had given the money to the firm, and the father did not derive any benefit from the money as a partner of the firm. The Supreme Court upheld this view, noting that the donees had assumed possession and enjoyment of the money, and the donor was entirely excluded from its possession and enjoyment. The benefit the donor had as a partner in the firm was not referable to the gift. The court concluded that the sum of Rs. 1 lakh could not be included in the estate under section 10 of the Act. Conclusion: The Supreme Court dismissed the appeal, holding that neither the house property in Avanashi Road, Coimbatore, nor the sum of Rs. 1 lakh gifted to the sons could be included in the estate of the deceased under section 10 of the Estate Duty Act, 1953. The appeal was dismissed with costs.
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