1968 (10) TMI 12 - HC - Income Tax

Estate Duty Act, 1953 - sum deposited by the assessee in the bank in the name of his minor son - value of the agricultural properties gifted by the deceased to his sons under the gift deed - includibility in the estate of the deceased u/s 10

Issues Involved:
1. Inclusion of Rs. 25,000 deposited by the deceased in the name of his minor son under section 10 of the Estate Duty Act.
2. Inclusion of the value of agricultural properties gifted by the deceased to his sons under section 10 of the Estate Duty Act.

Issue-wise Detailed Analysis:

1. Inclusion of Rs. 25,000 deposited by the deceased in the name of his minor son under section 10 of the Estate Duty Act:

The primary issue is whether the sum of Rs. 25,000 deposited by the deceased in the name of his minor son is includible in the estate of the deceased under section 10 of the Estate Duty Act. The facts reveal that the deceased deposited Rs. 25,000 in the Catholic Syrian Bank Ltd. in the name of his minor son and drew interest from the bank as the guardian, without maintaining any accounts regarding the withdrawn amount.

The Appellate Tribunal held that the mere deposit of money in another person's name does not constitute a valid gift without additional evidence showing the donor's intention to part with absolute rights over the property and the donee's acceptance of the gift. Since the deceased retained control over the amount and enjoyed the interest, the Tribunal included the amount in the estate of the deceased.

The counsel for the assessee argued that the Tribunal erred in its conclusion, asserting that the deposit constituted a valid gift, as the deceased acted as a guardian. However, the court considered whether section 10 of the Act applied, given the donor's control over the property and benefit from the interest.

Referencing the Supreme Court's decision in George Da Costa v. Controller of Estate Duty, the court emphasized that for a gift to be excluded from estate duty, the donee must assume bona fide possession and enjoyment of the property immediately and retain it to the exclusion of the donor. The court concluded that the donor's control and benefit from the interest attracted section 10, making the Rs. 25,000 includible in the estate.

2. Inclusion of the value of agricultural properties gifted by the deceased to his sons under section 10 of the Estate Duty Act:

The second issue is whether the value of agricultural properties gifted by the deceased to his sons is includible in the estate under section 10 of the Act. The deceased executed a gift deed transferring immovable properties to his seven sons, including three minors, and managed these properties as the attorney of the major sons and guardian of the minors.

The Tribunal and subordinate authorities deemed these properties as passing on the donor's death under section 10, as the deceased retained control and utilized the income from these properties. The court supported this view, referencing the legislative intent of section 10, which includes property where the donor retains some interest.

The court cited the Privy Council's decisions in Commissioner of Stamp Duties of New South Wales v. Permanent Trustee Co. of New South Wales and Clifford John Chick v. Commissioner of Stamp Duties, which emphasized that any retained benefit by the donor, even if unrelated to the gift, brings the property within the scope of section 10.

Given the donor's management and benefit from the properties, the court concluded that section 10 applied, making the value of the agricultural properties includible in the estate.

Judgment:

In conclusion, the court answered both questions in the affirmative and against the assessee. The sum of Rs. 25,000 and the value of the agricultural properties are includible in the estate of the deceased under section 10 of the Estate Duty Act. The Controller of Estate Duty is entitled to costs from the assessee, and a copy of the judgment will be forwarded to the Appellate Tribunal as required by section 64(6) of the Act.

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