1969 (7) TMI 11 - HC - Income Tax

Estate Duty Act, 1953 - assessee had deposited advance gift tax under section 18 of the Gift Tax Act and was given credit for 10 per cent of the amount deposited, at the time of assessment - Whether the amount to be deducted under section 50A of the Estate Duty Act had been correctly determined by the Tribunal - Held, yes

Summary

Issues:
Interpretation of section 18(1) of the Gift-tax Act and section 50A of the Estate Duty Act to determine the correct amount of gift-tax deduction for estate duty assessment.

Analysis:
The case involved a question referred by the Tribunal regarding the correct determination of the amount to be deducted under section 50A of the Estate Duty Act. The deceased had made gifts to his grandsons and paid gift-tax, with the issue revolving around the deduction of either Rs. 2,560 or Rs. 3,200 towards gift-tax for estate duty assessment.

The relevant provision, section 18(1) of the Gift-tax Act, required a person making a taxable gift to pay a specified amount into the treasury within a set timeframe. In this case, the gift-tax payable by the deceased was Rs. 3,200, and he received credit for an additional 10% of the amount paid for making a voluntary payment within the stipulated time. The court emphasized that the 10% credit should not be considered as part of the gift-tax amount to be deducted for estate duty purposes.

The court examined section 50A of the Estate Duty Act, which provides for a reduction in estate duty payable where gift-tax has been paid on the same property. As the deceased had paid a gift-tax of Rs. 3,200, the court determined that only this amount should be deducted from the estate duty payable, in line with the provisions of the law.

Ultimately, the court agreed with the Tribunal's view that the correct amount to be deducted towards gift-tax for estate duty assessment was Rs. 3,200. The judgment favored the interpretation that only the actual gift-tax amount should be deducted, excluding the 10% credit provided for timely payment. The court ruled in the affirmative on the question referred, with no order as to costs.