1985 (8) TMI 96 - AT - Income Tax

Summary

Issues:
1. Inclusion of amounts in deceased partner's estate under Estate Duty Act.
2. Interpretation of retirement benefits received by deceased partner.
3. Applicability of section 9 of the Estate Duty Act.
4. Comparison of decisions from different High Courts.
5. Determination of whether a gift was made by the deceased partner.

Analysis:

Issue 1: The deceased partner received retirement benefits from two firms, Krishan Khandsari Udyog and Ghanshyam Sugar Factory. The Assistant Controller included certain amounts in the deceased's estate under the Estate Duty Act, alleging that the deceased had made a gift by not claiming his share in the development reserve and investment allowance.

Issue 2: The Appellate Controller disagreed with the Assistant Controller's decision, stating that foregoing a share in the development reserve cannot be considered a gift. The Appellate Controller found no evidence of an intention to gift, leading to the exclusion of the amounts from the deceased's estate.

Issue 3: The department appealed the decision, arguing that the deceased was entitled to a share in the reserves of the firms and had effectively gifted them to the continuing partners. The department relied on a Madras High Court decision to support their position.

Issue 4: The accountable person's counsel cited a Bombay High Court decision to counter the department's argument, emphasizing that the deceased had only received his capital upon retirement and had been relieved of future liabilities. The Tribunal agreed with the counsel, finding the Bombay High Court decision more applicable to the case at hand.

Issue 5: The Tribunal determined that no gift had been made by the deceased partner based on the retirement terms and lack of evidence supporting a gift intention. Citing the Bombay High Court decision, the Tribunal dismissed the appeal, affirming the Appellate Controller's findings regarding the exclusion of the amounts from the deceased's estate.