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TMI Blog2002 (8) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... hich had become due to him by way of remuneration and value of perquisites, prior to his death. The amount that was found due from his current account in the company was only Rs. 28,277. - The order of the Tribunal, therefore, cannot be sustained. The question referred to us is answered in favour of the assessee and against the Revenue. - - - - - Dated:- 19-8-2002 - Judge(s) : R. JAYASIMHA BABU., K. P. SIVASUBRAMANIAM. JUDGMENT The judgment of the court was delivered by R. JAYASIMHA BABU J.-This matter arises under the Estate Duty Act. The question referred for consideration at the instance of the assessee is, "whether, on the facts and circumstances of the case, the Appellate Tribunal was right in holding that there has been tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the effect of a disposition made by the person or with his consent or any associated operations of which such a disposition formed one. "Disposition" is defined in rule 2(6), inter alia, as including "any trust, covenant, agreement or arrangement, whether made by a single operation or by associated operations". Rule 5 deems the income mentioned in sub-clauses (1)(a), (b) and (c) as the benefits accruing to the deceased from the company. They include any periodical payment made to the deceased out of resources or at the instance of the company. Rule 5 which deals with the benefits accruing to the deceased can be invoked only when and after it is found that there is transfer of property by the deceased to the controlled company. Absent such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,50,000 ordinary shares, all of Rs. 10 each. He sells the estate and the securities to the company in consideration for the shares of which 50,000 ordinary shares are allotted to him and the rest to his wife and children. As part of the arrangement, he is appointed governing director for life at a salary of Rs. 50,000 per year and the residential house, whose annual value is Rs. 5,000, is let to him as governing director at a rent of Rs. 1,000 per year. On A's death more than two years later, estate duty would, but for the provisions of this section, be payable only in respect of the 50,000 shares which he retained. There was no gift to the company for the company gave full consideration. The only gift was a gift of the shares to his wife ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho by floating the company and contributing his skill and labour as a director or as other officer of the company received remuneration for the services rendered by him to such company, as exigible to estate duty. Mere delay in drawal of the remuneration would not have the effect of his transferring to the company the undrawn salary thereby attracting the mischief of section 17. Here all that is stated by the assessing authority is that the deceased had become the managing director of a controlled company and had drawn remuneration, perquisites and benefits therefrom. That by itself will not attract section 17 of the Estate Duty Act. Moreover, the accountable person had in the return treated the balance of the credit amount of the deceas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... build up its net worth by contributing his own skill and labour for which he received remuneration from the company. The delay on the part of the deceased in drawing the remuneration and other perquisites to which he was entitled, cannot, in the circumstances, be regarded as a transfer by him of the undrawn salary and benefits to the company which would render a part of the assets of the company includible in his estate. In fact, the deceased had drawn most of the monies which had become due to him by way of remuneration and value of perquisites, prior to his death. The amount that was found due from his current account in the company was only Rs. 28,277. The order of the Tribunal, therefore, cannot be sustained. The question referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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