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Issues: Disallowance under section 46 of the ED Act for estate valuation.
Analysis: 1. The appeal by the Revenue challenged the order of the AAC regarding the disallowance under section 46 of the ED Act for the estate of a deceased individual. The deceased had a current account with his wife, and the Asstt. CED disallowed a deduction claimed by the Accountable Person based on certain findings. 2. The Asstt. CED, on appeal, noted the transactions in the current account between the deceased and his wife over several years. He concluded that the deceased had a running account with his wife, indicating no direct correlation between the amount gifted by the deceased and the outstanding liability. Consequently, he deleted the addition under section 46. 3. The Revenue contended that the mere inclusion of property gifted by the deceased in the resources of the creditor triggers section 46, citing relevant court decisions. They argued that the addition made by the Asstt. CED should be restored. 4. The Accountable Person argued that the amount gifted in 1959 was utilized by the wife for her money lending business, and subsequent advances were from her own sources, not the gifted amount. It was emphasized that the wife had independent income and the gifted amount was not directly linked to the subsequent transactions. 5. The Tribunal analyzed sections 44 and 46 of the ED Act, emphasizing the requirement of a direct nexus between the property derived from the deceased and the outstanding debt. It was observed that the gifted amount was withdrawn by the wife, and the liability arose later, indicating no direct connection between the gift and the debt. 6. Further, the Tribunal examined the application of sub-section (a) and (b) of section 46, highlighting the necessity of a clear nexus between the gift and the incurring of the debt. The Tribunal found that no such connection existed in this case, as evidenced by the wife's independent funds and the absence of intention to use the gift for advancing amounts to her husband. 7. Ultimately, the Tribunal dismissed the appeal, affirming the order of the AAC based on the lack of applicability of section 46 to the facts of the case. The decision was grounded in the absence of a direct nexus between the gifted amount and the subsequent debt, leading to the conclusion that neither sub-section (a) nor (b) of section 46 applied in this scenario.
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