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TMI Blog1979 (10) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... hri P. PR. Subramanian Chettiar who died on 22nd Jan., 1975. In computing the principle value of the estate, the Asstt. CED found that the deceased had a current account with his wife Smt. S.P. Ponnammal Achi, in which there was an outstanding amount of Rs. 21,7990 and which was claimed as a deduction. The Asstt. CED also found that the deceased had made a gift of Rs. 30,000 in 1959. He was of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the outstanding liability. He accordingly held that the provisions of s. 46 were not applicable and deleted the addition. 3. The revenue has appealed and it is contended that once the resources of the creditor included property gifted by the deceased, there is no other condition required for the application of s. 46 of the Act. Reliance was placed on the decisions of the Madras High Court in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 44 of the ED Act provides for deduction of debts incurred by the deceased only if they are incurred bona fide and for full consideration. s. 46 imposes a further limitation namely that if in respect of such a debt the value of any consideration consisted of (a) property derived from the deceased; or (b) consideration given by any person amongst whose resources there was at any time included, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) also. It has been held in the case of Mrs. Ratnakumari Kumbhat(2) that to this sub-clause does not require the existence of property derived from the deceased with the person giving the loan at the time of making the loan and even if property is derived later this section would apply. But all the same the subsection also requires a nexus between the incurring of the debt and the gift because of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt which the deceased had with his wife also shows that she had enough funds of her own. Though the gifted amount might have merged with the funds of her money lending business there is nothing to indicate that the gift was given to enable her to advance any amounts to her husband later. The alternating credit and debit balances in the years between the date of the gift and the date of death is al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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