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Issues involved: Application of Section 10 of the Estate Duty Act, valuation of gifted properties, abatement under Section 46, inclusion of Rs. 9,000 under Section 9, and inclusion of the value of the lineal descendant's share.
1. Application of Section 10 of the Estate Duty Act: The primary contention was whether the gifted properties should be deemed to have passed on the death of the deceased under Section 10 of the Estate Duty Act. The deceased had gifted properties to Rukmani Ammal, Chinnasamy Chettiar, and Jayalakshmi Ammal but continued to cultivate the lands as a lessee and collect rental income from the gifted properties until his death. Both the Assistant Controller and the Appellate Controller concluded that the deceased had not been completely excluded from the possession and enjoyment of the gifted properties, thus attracting the provisions of Section 10. The Tribunal upheld this conclusion, noting that the deceased's continued involvement in the properties' income and possession indicated that the donees had not assumed and retained possession to the exclusion of the deceased. 2. Valuation of Gifted Properties: The Appellate Controller had reduced the value of the lands gifted to Rukmani Ammal and Chinnasamy Chettiar based on a decision by the Madras High Court. However, this decision was later reversed by the Supreme Court, which clarified that Section 10 contemplates the entire property taken under the gift, not just the right to possession or enjoyment. Consequently, the Tribunal directed that the value of the gifted properties should be taken as determined by the Assistant Controller. 3. Abatement under Section 46: The contention was whether the abatement of Rs. 5,124 under Section 46(1) and Rs. 10,212 under Section 46(2) was justified. The accountable person argued that the proviso to Section 16(1) of the Estate Duty Act would apply, referencing a decision by the Madras High Court. However, no material evidence was provided to support this claim, leading the Tribunal to confirm the lower authorities' view that the abatement was correctly applied. 4. Inclusion of Rs. 9,000 under Section 9: The Assistant Controller included Rs. 9,000 under Section 9, arguing that the gift was not part of the normal expenditure of the deceased. The Tribunal found that Rs. 5,000 given to Rukmani Ammal for making jewelry for her daughter could be considered normal expenditure, thus falling under sub-section (2) of Section 9 and not within the mischief of sub-section (1). The Tribunal directed the deletion of Rs. 5,000 from the assessment. 5. Inclusion of the Value of the Lineal Descendant's Share: The Assistant Controller included Rs. 3,08,687 as the value of the lineal descendant's share, based on Section 34(1)(c) of the Estate Duty Act. The Madras High Court had previously held this section to be violative of Article 14 of the Constitution and thus unconstitutional. In light of this, the Tribunal held that there was no legal basis for aggregating the value of the estate of the lineal descendants and directed the deletion of the included amount. Conclusion: The appeal was allowed in part, with the Tribunal directing modifications to the assessment in accordance with its findings on the issues discussed.
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