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TMI Blog1975 (9) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... by their guardian the donor himself. The property was valued for the purpose of stamp duty at Rs. 77,100. The donees (through their guardian) realised the rent from this property from the tenants and deposited various amounts out of such rent realisations in the proprietary concern of the deceased. At the time of the death of the deceased the amount standing to their credit came to Rs. 22,820. The accountable persons claimed that this amount represented debt due from the estate of the deceased so as to be deductible under s. 44(a) of the Act. The Asst. Controller rejected this claim relying on s. 46(1)(b) of the Act. The Appellate Controller confirmed the disallowance. On further appeal, the Appellate Tribunal felt that s. 46(1)(a) was applicable to the debt in question. The amount of loan had been advanced out of the rent collected by the two sons from the property gifted by their father to them and, therefore, in the view of the Tribunal, the value of the consideration of the debt could be taken to be the property derived from the deceased, which brought it within the scope of s. 46(1)(a) itself. Before the Tribunal reliance was placed on the proviso to s. 46(1)(b) on behal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f that section, or for an incumbrance created by a disposition made by the deceased as therein mentioned, shall be subject to abatement to an extent proportionate to the value of any of the consideration given therefor which consisted of (a) property derived from the deceased; or (b) consideration not being such property as aforesaid, but given by any person who was at any time entitled to, or amongst whose resources there was at any time included, any property derived from the deceased: Provided that if, where the whole or a part of the consideration given consisted of such consideration as is mentioned in clause (b) of this sub-section, it is proved to the satisfaction of the Controller that the value of the consideration given, or of that part thereof, as the case may be, exceeded that " which could have been rendered available by application of all the property derived from the deceased, other than such (if any) of that property as is included in the consideration given or as to which the like facts are proved in relation to the giving of the consideration as are mentioned in the proviso to sub-section (1) of section 16 in relation to the purchase or provision of an annui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ala Mudali Street, remained intact and that the deceased had not got any benefit from that property. In the submission of the learned counsel the receipts by way of interest and their deposit could not be said to be " property derived from the deceased ". This contention overlooks subs. (3) of, s. 46. It is provided therein that s. 16(2) would have effect for the purpose of s. 46, as it has effect for s. 16 itself. Section 16(2) defines certain expressions. One of those expression is " property derived from the deceased". This expression has been defined as meaning any property which was the subject-matter of a disposition made by the deceased. The word " subject-matter " has been defined in s. 16(2)(c) as including, in relation to any disposition, any annual or periodical payment made or payable under or by virtue of the disposition. In Ratnakumari Kumbhat's case [1975] 101 ITR 572 (Mad), to which we have just alluded, the facts are as follows: The deceased, in that case, made a total gift of Rs. 1,50,000 at the rate of Rs. 50,000 to each of his three sons. They deposited this amount with him for interest at 7 1/2% per annum. The gift was on 31st March, 1955, and the donor died ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of applying s. 46(1)(a), there must be a contemporaneous intention at the time of making the gift to get back the income from the property on the part of the donor. This contention has to be negatived in view of the earlier decision of a Bench of this court in Kandaswami Pillai v. CED [1969] 73 ITR 564. In that case several years prior to the death of one Arunachala, belonging to an HUF, there were gifts of agricultural lands to three members of the family. The family managed the lands for the ladies. The agricultural lands were sold in 1957 for Rs. 16,500 and the sale proceeds were credited to their accounts. The amount due to the ladies out of the sale proceeds was the subject of claim of deduction as debt. The claim had been negatived by the estate duty authorities and also by the Tribunal. When the matter came before this court the contention on behalf of the accountable person was that there was no simultaneous 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 in the form of a liability so that the provision would apply. This contention was negatived. At page 570 it was observed as follows: " Readi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fixed deposits were encashed by them and shortly before his death, the two daughters brought back the sum of Rs. 10,000 each as deposits in their names in the proprietary concern of the deceased. The Asst. Controller and the Appellate Controller included the said amount in the assessment of the estate by way of disallowance under s. 46(1) of the Act. The question referred on these facts is as follows : " Whether, on the facts and circumstances of the case, the debts amounting to Rs. 20,000 due to the two daughters of the deceased under section 46(1) of the Estate duty Act is valid in law ?" In this case there is no scope for any refinement as to whether the property in the shape of these deposits, totalling Rs. 20,000, could be said to be " property derived from the deceased ". It is not in dispute that these two sums, Rs. 10,000 each, were the very gifts made by the deceased in favour of his daughters. Originally they were in the shape of fixed deposits, but later on these fixed deposits were encashed and brought into the proprietary concern of the deceased. Even in the case of the conversion of the property it was held in Kandaswami Pillai v. CED [1969] 73 ITR 564 (Mad), that ..... 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