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TMI Blog1968 (11) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... nam Chand and Pratap Chand Charities have been rightly disallowed in computing the principal value of the estate left by the deceased ? " The facts leading to the formulation of these three questions are : One Surajmal Poonam Chand died on 13th January, 1957, leaving his widow, Smt. Pankumari, who was the accountable person. The deceased, it may be stated, was the sole surviving coparcener of a joint Hindu family known as " Dhirji Ghandanmall & Sons " which carried on business as bankers and money-lenders. The Assistant Controller of Estate Duty noticed during the course of assessment that certain items among others which formed part of the estate of the deceased have not been included in the estate duty return submitted by her. These properties were : (a) Properties settled in trust by the deed dated 24th January, 1952, for the Surajmal Poonam Chand and Pratap Chand Charities (hereinafter referred to as S. P. P. Charities). (b) Sums amounting to Rs. 1,06,405 lent out by the deceased in the name of Smt. Pankumari Bai. (c) Properties valued at Rs. 2,11,253 gifted by the deceased to his wife and other relatives, which are detailed in the statement of the case : Rs. Properti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceased. As regards the properties gifted by the deceased it was found that all the gifts except the one to Smt. Lilavathi Bai were made on the 24th October, 1953, i.e., one day prior to the day on which the Estate Duty Act came into operation. The Assistant Controller found that the deceased retained complete control over the gifted properties, collected rents and also utilised the same for his own purposes. He, therefore, held that the gifted properties detailed in paragraph 3(c) were includible in the estate of the deceased. Apart from this, deductions in respect of certain liabilities were also claimed : (a) Credit balance in various accounts on account of accumulation of rents from gifted properties Rs. 20,721 (b) Other liabilities detailed as below : Smt. Pankumari 1,08,689 Smt. Gumankumari 21,526 Smt. Hemalata Bai 12,857 Sri. A. Motilal 10,999 Smt. Mankunwar Bai 10,256 Smt. Lilavathi Bai 6,857 -------------- 1,71,184 --------------- (c)Liabilities to S. P, P. Charities Rs. 2,701. The Assistant Controller, however, held that these claims could not be allowed in view of the provisions of section 46(1) of the Act. In any case the accountable person appealed to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he estate of the deceased, the amounts representing rent accumulations could not be treated as genuine liabilities. As for the liabilities of Rs. 1,71,184 the Board held that all the items except the item of Rs. 6,857 shown as payable to Smt. Lilavathi Bai were allowable. In regard to the sum of Rs. 6,857 the Board found that as early as in 1945 the deceased had gifted a property worth Rs. 20,000 to Smt. Lilawathi and that there was nothing to show that there was no connection at all between the gift made in 1945 and the above loan of Rs. 6,857. It was accordingly held that this loan was rightly disallowed under section 46. The question whether the money-lending business belonged to the deceased or to Pankumari Bai being one of fact was not referred. The first question which arises for determination to our mind is simple, viz., whether in fact a trust was created or not. During the course of the arguments, the learned advocate for the assessee, Sri Mallikarjuna Rao, referred us to the trust deed, the terms of which show that the deceased had out of his free will and consent decided to donate certain properties of the value of Rs. 1,50,000 (H.S.) for the objects mentioned separatel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le vests in the trustees while the beneficial ownership is in others. We can well understand where there is a sole trustee who is also the owner of the property not conveying the property to himself because there is no need for transfer as he is not only the legal owner but also the sole trustee. In such circumstances, a mere declaration would be sufficient to change the nature of his possession from that of an owner to that of a trustee. There is no need for any overt act except declaration of trust. But where a body of trustees other than the owner himself or including the owner is to be vested with the title, then that property must be conveyed to that body of persons including the owner. Their lordships of the Supreme Court have stated in Tulsidas Kilachand v. Commissioner of Income-tax : " No doubt, under sections 5 and 6 of the Indian Trusts Act, if the declarer of the trust is himself the trustee also, there is no need that he must transfer the property to himself as trustee; but the law implies that such a transfer has been made by him, and no overt act except a declaration of trust is necessary. The capacity of the declarer of trust and his capacity as trustee are differe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assistant Controller had, in not allowing the liabilities, relied upon the provisions of section 46(1)(b). It is common ground that the resources of these parties in whose personal accounts the accumulated rents have been credited included properties derived from the deceased. In these circum stances, the Board considered that the provisions of section 46 are attracted and have been rightly applied. We do not find any reason to differ from this conclusion because they are based on facts, viz., that these are liabilities of the deceased in respect of the properties gifted by him, and therefore section 46(1)(a) of the Estate Duty Act applies, which is as follows : " 46. (1) Any allowance which, but for this provision, would be made under section 44 for a debt incurred by the deceased as mentioned in clause (a) of that section, or for an incumbrance created by a disposition made by the deceased is therein mentioned, shall be subject to abatement to an extent proportionate to the value of any of the consideration given therefore which consisted of- (a) property derived from the deceased... " These liabilities are in respect of properties derived from the deceased and have been r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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