1971 (7) TMI 28 - HC - Income Tax

Transfer Of Property Act, 1882 - Whether only half share of the properties included in the estate duty assessment of the deceased should have been included as property passing or deemed to pass on his death under section 7 of the Act - Whether the amount of Rs. 80,000 standing in the names of the grand-children of the deceased was correctly included in his estate

Issues Involved:
1. Whether only half share of the properties included in the estate duty assessment should have been included as property passing or deemed to pass on the deceased's death under section 7 of the Estate Duty Act, 1953.
2. Whether the amount of Rs. 80,000 standing in the names of the grand-children of the deceased was correctly included in his estate.

Issue-wise Detailed Analysis:

Issue 1: Inclusion of Half Share of Properties Under Section 7
The primary question was whether only half of the properties included in the estate duty assessment should be considered as passing on the deceased's death. The accountable person argued that the deceased had only half share in certain properties, with the other half belonging to his wife, Smt. Godawari Devi. The properties originally belonged to a joint Hindu family, and upon partition in 1936, the deceased and his two sons received 1/3rd of 1/5th share each. The wife did not claim any share during the partition, leading the accountable person to assert that the deceased's share included his wife's share.

The Assistant Controller rejected this claim, stating that the wife and other female family members had renounced their claims and acquiesced in the partition for more than 12 years, making it unenforceable. The Board upheld this view, presuming that the wife relinquished her interest in favor of her husband and sons, making the deceased the owner of the entire property received from the partition.

The court examined various legal precedents, including cases like Mst. Radha Bai v. Pandhari Nath Bapu, Ganesh Dull Thakur v. Jewach Thakoorain, and Partap Singh v. Dalip Singh, which emphasized a wife's right to a share in joint family property upon partition. However, it was noted that the wife does not become the owner of any share until it is actually allotted to her. The court concluded that since no share was allotted to Smt. Godawari Devi during the partition, she did not own any part of the property at the time of the deceased's death. Consequently, the entire property was rightly included in the estate duty assessment.

Issue 2: Inclusion of Rs. 80,000 in the Estate
The second issue concerned the inclusion of Rs. 80,000, claimed to have been gifted by the deceased to his grand-children on May 9, 1952. The Assistant Controller found that the gift was incomplete and invalid due to the absence of a registered instrument of transfer and delivery of possession. The Board supported this view, noting that the signatures underneath the debit and credit entries were appended later to create evidence of acceptance of the gift.

The court, however, found no evidence of fraud or forgery in the signatures, which were likely made to show the transaction's validity. Citing Gopal Raj Swarup v. Commissioner of Wealth-tax, the court noted that a valid gift could be made by book entries if sufficient funds were available in the donor's account. The court also addressed the argument regarding the transfer of an actionable claim, stating that section 130 of the Transfer of Property Act requires an instrument in writing but not necessarily a registered one. The debit entries in the account books, signed by the donor, were deemed sufficient to transfer the claim.

The court concluded that the gift of Rs. 80,000 was valid and made more than two years before the deceased's death, thus incorrectly included in the estate.

Conclusion:
1. The entire share in the properties included in the estate duty assessment was correctly included as property passing on the deceased's death under section 7 of the Act. This question was answered in the negative and in favor of the revenue.
2. The amount of Rs. 80,000 standing in the names of the grand-children was incorrectly included in the deceased's estate. This question was answered in the negative and in favor of the accountable person.

The court directed the parties to bear their own costs, with counsel's fee assessed at Rs. 200.

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