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TMI Blog1968 (9) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... e value of the properties of the Hindu undivided family, a sum of Rs. 11,510 was rightly added under section 46(2) of the Estate Duty Act, 1953 ? " On January 21,1959, A. Arunchalam Pillai died. He was one of the members of a Hindu undivded family, the others being his two brothers. The Assistant Controller of Estate Duty, Coimbatore, valued the properties of the family at Rs. 14,30,822 and the one-third share of the deceased at Rs. 4,75,941, for purposes of levy of estate duty. The estate duty payable was assessed at Rs. 49,983.13. Several years prior to the death of Arunachalam Pillai, the family had made a gift of certain agricultural lands to three female members of the family: (1) Nagarathnammal, (2) Saraswathi Ammal and (3) Sivakami Ammal. The family managed the properties for the ladies, and receipts and outgoings were exhibited in a separate account. In May, 1957, the agricultural lands were sold and a sum of Rs. 16,500 was realised and credited in favour of the three ladies. Thereafter, a sum of Rs. 5,500 was paid to each of the two ladies, Nagarathnammal and Sivakami Ammal, towards their share of the sale proceeds. At the death of Arunachalam Pillai, the balance due to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icable, unless, at the time of making the gift, there was a simultaneous intention on the part of the donor to borrow the subject-matter of the gift, so to speak, at a later date, in the form of a liability. This construction is supported by learned counsel by reference to the words " given therefor " in section 46(1). In order to appreciate the argument, we have to notice the relative statutory provisions. Section 5 charges the principal value of the property which passes on the death of the deceased. A group of sections commencing from section 6 prescribes what property shall be deemed to pass. Section 7 in particular, relates to cesser of interest on death, and says that, subject to the provisions of the section, property in which the deceased had an interest ceasing on the death of the deceased shall be deemed to pass on the deceased's death to the extent to which a benefit accrues or arises by the cesser of such interest including, in particular, a coparcenary interest in the joint family property of a Hindu family governed by the Mitakshara law. Section 39(3) provides for estimating the principal value of such interest. It is to the effect that, for the purpose, the propertie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s satisfaction or discharge of a debt or incumbrance in the case of which sub-section (1) would have had effect on his death if the debt or incumbrance had not been satisfied or discharged, or in reduction of a debt or incumbrance in the case of which that sub-section had effect on his death, shall, unless so paid or applied two years before the death, be treated as property deemed to be included in the property passing on the death and estate duty shall, notwithstanding anything in section 26, be payable in respect thereof accordingly. (3) The provisions of sub-section (2) of section 16 shall have effect for the purpose of this section as they have effect for the purpose of that section. " The argument for the assessee, in the first of these references, is two-fold. The first is that the consideration for the debt being the sale proceeds and not the property itself derived from the family, the debt is not hit by section 46(1)(a), and the second is that, in any case, only if there is an intention on the part of the donor, at the time of making the gift, to get back the property comprised therein at a later date but in the form of a liability that the provision will apply. It se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... definition of " property ", that because sale proceeds represent property, viz., the lands, and the property was derived from the family, the nexus required between the debt and the consideration of the particular type, in order to apply the limitation under section 46(1)(a) is satisfied. We are unable to see what further requirement is to be satisfied, in order to apply section 46(1)(a). Sub-section (3) of section 46 attracts, for its purpose, the provisions of section 16(2). Section 16(2) defines "property derived from the deceased ". The expression means : " ...... any property which was the subject-matter of a disposition made by the deceased, either by himself alone or in concert or by arrangement with any other person, notwithstanding that the disposition was made for full consideration in money or money's worth paid to him for his own use or benefit, or which represented any of the subject-matter of such a disposition, whether directly or indirectly, and whether by virtue of one or more intermediate dispositions and whether any such intermediate disposition was or was not for full or partial consideration. " This makes it abundantly clear, to our minds, that "property " ..... X X X X Extracts X X X X X X X X Extracts X X X X
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