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- Deletion of a sum from the principal value of the estate under s. 9 of the Estate Duty Act. Analysis: The appeal before the Appellate Tribunal ITAT Madras-B concerned the deletion of a sum of Rs. 26,667 from the principal value of the deceased's estate under s. 9 of the Estate Duty Act. The Asstt. CED had included this amount based on the deceased's surrender of interest in a firm where he was a partner, in favor of his sister's son. The Appellate CED, however, observed that the disposition did not qualify as an immediate gift under s. 9, as it was not to a relative as per s. 27 of the Act. The Appellate CED subsequently deleted the sum, leading to the Revenue's appeal (para. 2). The Department representative argued that the extinguishment of the deceased's right in the firm in favor of his sister's son constituted a disposition falling within the Estate Duty Act. References were made to legal texts and court decisions to support this position. On the other hand, the accountable person contended that the inclusion of the sum was unwarranted, emphasizing the commercial nature of the transaction and the consideration involved in admitting the sister's son as a partner. Various rulings were cited to bolster this argument (para. 3). Upon examination of the partnership deed and the circumstances surrounding the deceased's reduction in share, the Tribunal analyzed the applicability of s. 9 of the Estate Duty Act. It was noted that for s. 9 to apply, there must be a disposition operating as an immediate gift inter vivos. The Tribunal considered the definition of "relative" under s. 27 and concluded that the sister's son did not fall within this definition, thereby negating the gift classification. Additionally, the transaction was deemed to lack the essential elements of a gift, given the commercial nature and consideration involved in the partnership arrangement. Legal precedents were cited to support this interpretation, highlighting the absence of a gift element in similar contexts (para. 5). Ultimately, the Tribunal upheld the decision of the Appellate CED to delete the sum from the estate valuation. The appeal by the Revenue was dismissed, affirming that the transaction did not qualify as a gift under the Estate Duty Act (para. 6).
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