1986 (12) TMI 103 - AT - Income Tax

Issues Involved:
1. Re-opening of the assessment under section 59(b).
2. Deduction under section 33(1)(n) for the gifted property.
3. Deletion of interest levied under section 53.
4. Allowance of deduction under section 18A of the Gift-tax Act.

Issue-wise Detailed Analysis:

1. Re-opening of the assessment under section 59(b):
The Accountable Person challenged the re-opening of the assessment by the Assistant Controller of Estate Duty (ACED) under section 59(b) based on the Supreme Court decision in Indian & Eastern Newspaper Society v. CIT [1979] 119 ITR 996. The ACED initially dropped rectificatory proceedings under section 61 but later reopened the assessment under section 59(b) on re-appraisal of the same materials. The Appellate Controller upheld the ACED's action, citing the decision in CED v. K. Hilal [1981] 130 ITR 781 (Mad.) as new information. The Tribunal confirmed that the ACED's action was valid, stating that the Madras High Court decision constituted "information" under section 59(b) and justified the re-opening of the assessment.

2. Deduction under section 33(1)(n) for the gifted property:
The Accountable Person argued that the deceased continued to reside in the gifted property until her death, thereby entitling them to a deduction under section 33(1)(n). The Appellate Controller rejected this, following the Madras High Court decision in K. Hilal's case, which held that the deceased, having delivered possession of the property, could not claim a right of use unless explicitly reserved. The Tribunal upheld this view, confirming that the exemption under section 33(1)(n) was not applicable as the deceased was only a permissive user of the property, not the owner at the time of death.

3. Deletion of interest levied under section 53:
The department contested the deletion of interest levied under section 53(3) by the Appellate Controller. The Tribunal upheld the Appellate Controller's decision, noting that section 53(3) does not provide for the imposition of interest in a re-assessment under section 59(1)(b).

4. Allowance of deduction under section 18A of the Gift-tax Act:
The Appellate Controller directed the ACED to allow deduction of stamp duty and gift-tax, including the rebate under section 18A of the Gift-tax Act. The department argued that section 18A of the Gift-tax Act does not apply under the Estate Duty Act. The Tribunal modified the Appellate Controller's order, directing the ACED to allow relief only as per section 50A of the Estate Duty Act, which does not reference section 18A of the Gift-tax Act.

Conclusion:
The appeal of the Accountable Person was dismissed, and the departmental appeal was allowed in part. The Tribunal upheld the re-opening of the assessment and the denial of the deduction under section 33(1)(n). It also confirmed the deletion of interest under section 53 but modified the allowance of deductions under section 18A of the Gift-tax Act to conform with section 50A of the Estate Duty Act.

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