9911796707
TMI Blog1968 (11) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... The estate duty assessment relates to the estate of late Gopisetty Ratnaiah, who died on May 25, 1957. His widow, Smt. Gopisetty Seshamma, who is the accountable person, filed a statement of account declaring the principal value of the estate passing on the death of the deceased, Ratnaiah, at Rs. 1,57,443. The assessing authority (the Assistant Controller of Estate Duty, Hyderabad) determined the net principal value of the estate at Rs. 5,26,098 and the estate duty payable thereon at Rs. 49,600.30 In arriving at the said value, the following items, besides other properties were included as forming part of the estate of the deceased. 1. Cash 60,000 2. Jewellery 32,450 3. N.G.P. Notes 21,249 4. House No. 85 at Nallagunta 22,000 5. House Nos. 1234, 1235 and 1238 at Bolarum 5,000 The accountable person claimed the aforesaid items as her personal property. With respect to the first item, cash of Rs. 60,000, while the statement of account filed by the accountable person (the applicant herein) did not show that the deceased had left any cash, the Assistant Controller found that the Commissioner appointed by the court of the Subordinate judge, Secunderabad, to take an inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Rs. 2,67,229. The said amount cannot be included as part of the estate of the deceased. So far as Rs. 20,000 are concerned, the applicant claimed the said sum as solely belonging to her and not to the deceased and thus no amount of cash could be included in the estate of the deceased. The Central Board found, on a consideration of the entries in the accounts and the explanation of the accountable person, that her account in the books of the deceased stood at a credit balance of Rs. 53,226 on November 9, 1950, while it stood as a debit balance of Rs. 4,298 on May 23, 1957. So far as the debit balance is concerned, it appeared as an asset in the deceased's balance-sheet and it was included in the estate as the value of investments in the business. The Board further drew an inference that the monies belonging to the deceased were lent in the name of his wife, the accountable person, and that the same was credited to her account in the books of the deceased, that the withdrawals during the period November 9, 1950, to May 23, 1957, amounted to Rs. 57,000 and out of the said amount, withdrawals to the extent of Rs. 26,928 were made during the two years prior to the death of the dece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he deceased. If a debt is created by the deceased it shall be subjected to abatement to an extent proportionate to the value of any consideration thereof and which consisted of property derived from the deceased. Admittedly, the funds for the money-lending business in the name of the applicant came from the deceased in the first instance and these amounts had also passed through the account of the applicant in the books of the deceased. If this account had shown a credit balance at the time of the death of the deceased, the said liability would fall under section 46(1)(a) of the Act arid it would not be deductible from the value of the estate. If the liability to repay the debt had remained owing on his death, it would have been disallowed under section 46(1) of the Act. But section 46(2) of the Act provides that : " Money or money's worth paid or applied by the deceased in or towards satisfaction or discharge of a debt or encumbrance in the case of which sub-section (1) would have had effect on his death if the debt or encumbrance had not been satisfied or discharged, or in reduction of a debt or encumbrance in the case of which that sub-section has effect on his death, shall, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The proviso is omitted as it is, not necessary for the purpose of this case. It is the contention of Sri Veerabhadraiah, the learned counsel for the applicant, that the deceased being the husband of the applicant, was living in the house and that it would not amount to deriving any benefit from the said house property gifted to the wife. We are of opinion that both the Assistant Controller and the appellate authority erred in holding that the provisions of section 10 of the Act are applicable to the said house No. 85. When a donor lived with his wife in the house gifted to her till his death, the question whether the properties are liable to be included in the estate of the deceased under section 10 of the Act, has been decided in a recent judgment of this court in Mohammed Bhai v. Controller of Estate Duty by a Division Bench consisting of one of us (the Chief Justice) and Sambasiva Rao J. In similar circumstances, the learned Chief Justice, delivering the judgment of the court, observed at page 777, as follows : " The only way in which possession can be given to a person who is already in possession is by vesting legal title in that person. The erstwhile possession as a lice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty and the wife. In such circumstances, the fundamental point for consideration is that a husband's going to the wife for consortium or coverture is not a proprietary right in respect of the house gifted, and section 10 was not applicable to the case." Applying the principle of the aforesaid decision, it follows that the property, house No. 85, Nallagunta, was not includible in the estate of the deceased under section 10 of the Act. Coming to the other properties, viz., N. G. P. notes and the other house properties situated at Bolarum, the Assistant Controller and the appellate authority found concurrently that the assets were admittedly gifted by the deceased to his wife, that the income from these assets, viz., rents from the houses and the interest from the N. G. P. notes was received by the deceased and merged with the monies in money-lending business, even though a credit entry was made in the account of his wife, that no interest was at any time credited to the account of his wife for the monies utilised by the deceased. On these facts the Central Board accepted the view of the Assistant Controller. The Controller came to the conclusion that the deceased was not entirel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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