1968 (10) TMI 33 - HC - Income Tax

Estate Duty Act, 1953 - Whether the house property did not form part of estate of deceased - since there was no evidence or material on record from which an inference of benami can be drawn in respect of the house, house property does not form part of the estate of the deceased

Summary

Issues: Assessment of properties for estate duty under the Estate Duty Act including the inclusion of house properties at Feelkhana and Kachiguda, and a lorry property in the deceased's estate.

Analysis:
The judgment by the Andhra Pradesh High Court involved a reference from the Central Board of Direct Taxes regarding the inclusion of specific properties in the estate of the deceased for estate duty assessment. The deceased, Lingampeta Raja Gowd, left behind two daughters, Manikamma and Tajbai, with Tajbai's husband, Somalingam, being accountable for the estate. The Assistant Controller initially assessed the estate, including a house at Feelkhana in Tajbai's name, a house at Kachiguda belonging to Manikamma, and a lorry in Somalingam's name. The Central Board, on appeal, found that the property at Feelkhana was purchased by the deceased and later sold by Tajbai due to financial difficulties. However, the property was repurchased by Tajbai, and the funds from the mortgage were used in the deceased's business, leading to the inference of a benami transaction and application of section 10 of the Act.

The High Court emphasized that the burden of proof lies with the department to establish a transaction as benami when property is in someone else's name. The application of section 10 requires demonstrating that the donee did not assume possession and enjoyment to the exclusion of the donor. In the case of the Feelkhana property, the court found no evidence supporting the benami transaction claim. Tajbai's actions indicated ownership and utilization of the property for family purposes, refuting any possession by the deceased. The funds from the mortgage were credited to the son-in-law's account, showing no direct benefit to the deceased, further negating the benami assertion.

Regarding the Kachiguda property and the lorry, the court determined that the title to the house was not in Manikamma's name, and the lorry being in Somalingam's name did not preclude it from being part of the deceased's estate. Ultimately, the court ruled that the property at Feelkhana did not form part of the deceased's estate, while the house at Kachiguda and the lorry were included. The judgment highlighted the lack of evidence for a benami transaction in the case of the Feelkhana property, emphasizing the importance of proof and legal principles in estate duty assessments.