1972 (9) TMI 24 - HC - Income Tax

Estate Duty Act, 1953 - estate of the deceased which was subjected to duty, includes an item of immovable property - Whether the Central Government is bound to accept the offer to convey a property included in the estate of the deceased towards payment of Estate Duty

Summary

Issues:
1. Interpretation of Section 52 of the Estate Duty Act regarding the Central Government's discretion to accept property in lieu of cash for estate duty payment.
2. Whether the Central Government is obligated to accept an offer of property for estate duty payment under Section 52.
3. Validity of the Central Board of Direct Taxes' rejection of the petitioner's offer to transfer property in payment of estate duty.

Detailed Analysis:

Issue 1: The main issue in this case revolves around the interpretation of Section 52 of the Estate Duty Act, which allows the Central Government to accept property in satisfaction of estate duty. The petitioner argued that the word "may" in the section should be construed as "must" or "shall," meaning that the Government is obliged to accept property offered by the accountable person. The court considered various factors, including the legislative intent, context, and purpose of the provision, to determine whether the word "may" in Section 52 is mandatory or permissive.

Issue 2: The court analyzed the legislative intent behind the introduction of Section 52, which was aimed at alleviating hardship and providing relief to assessees by allowing them to offer property for estate duty payment. The court emphasized that the provision was intended for the benefit of the assessees, and the Government cannot arbitrarily refuse to accept property in payment of estate duty if there is an agreement on the price between the Government and the assessee. The court rejected the argument that Section 52 merely enabled the Government to accept property as an alternative mode of payment, emphasizing that it was meant to provide an additional option for estate duty payment.

Issue 3: The court scrutinized the Central Board of Direct Taxes' rejection of the petitioner's offer to transfer property for estate duty payment. The court found the rejection order to be non-speaking and arbitrary as it did not provide any valid reasons for the refusal. The court highlighted that the reasons provided in the counter-affidavit were irrelevant and did not justify the rejection of the offer. The court concluded that the Central Board of Direct Taxes' rejection of the petitioner's offer was erroneous and ordered the respondents to reconsider the offer in accordance with the law and the court's observations.

In conclusion, the court allowed the petition, quashed the Central Board of Direct Taxes' rejection order, and directed the respondents to reevaluate the petitioner's offer of property for estate duty payment. The court emphasized the importance of considering the legislative intent and providing relief to assessees in such matters.