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TMI Blog1982 (10) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the period of three years before his death and even earlier, the deceased had been withdrawing various sums of money at one time or another from this current account for making investments outside. The Asst. Controller took up for consideration the nature of the deceased's current account with the company and also the character of the withdrawals therefrom. This inquiry was undertaken by the Asst. Controller while examining the prospects for applying s. 17 to this case and with a view to finding out whether estate duty liability can be foisted to any extent on the assets of this company as a controlled company, having regard to the relationship between the deceased's current account on the one hand and the company's resources on the other. The Asst. Controller gave thought to these matters, and ultimately came to the conclusion that the amount to the credit of the deceased in his current account must be treated as a " transfer " of property by the deceased to the company, and the withdrawals from the current account must be regarded as " benefits " accruing to the deceased from the company. On these findings, the Asst. Controller proceeded to fix the quantum of liability for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, which carried an elaborate meaning of the expression "periodical payment" in the following fashion: " (2) For the purposes of these rules, the expression 'periodical payment' means a payment by way of dividend or interest, a payment by way of remuneration not being a single lump sum payment, and any other payment being one of a series of payments, whether inter-connected or not, whether of the same or of varying amounts, and whether payable at regular intervals or otherwise. " The departmental view of r. 5(2) has always been that practically all payments must be treated as periodical payment, the only exception being " a single lamp sum payment ", as an exception expressly excluded from the definition. In their order under reference, the Tribunal would seem to have fallen in with the departmental understanding of the scope of this rule. For, without going into any other question, the Tribunal straightaway entered upon the task of finding out whether the deceased's withdrawals could be regarded as a single lump sum payment. The record shows that the deceased's current account with the company wag opened on November 16, 1966, and remained right through till his death on Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e meaning of r. 5 of the Controlled Companies Rules. Both the standing counsel for the Department and the learned counsel for the accountable person agree that the Tribunal had apparently understood the language of r. 5(2) wider than it has been used by the framers of the Rules. Quite plainly, the Central Board which framed these Rules did not intend to rope in any and every payment within the expression it periodical payment ". If the Central Board had so intended, nothing would have been easier than to say that all payments shall be deemed to be periodical payments excepting a single lump sum payment. What actually has been set out in r. 52) as a rule of interpretation is that the payment, in order to be a periodical payment, must be one of a " series " of payments. The question in every case, therefore, is not whether there has been a payment, but whether the payment, such as it is, can be regarded as being one of a " series " of payments. There can be no doubt that the expression " series " has been put in advisedly and with a purpose. Therefore, the word must carry some significance. It cannot be overlooked in interpretation. The expression " series" is meant to denote a numbe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alone, among the text book writers, has something tangible to say on the subject. In Hanson's Death Duties, 9th Edn., at p. 408, the matter is dealt with as follows: " A series may, according to the sub-section include payments which are of different amounts, paid at irregular intervals, and not inter-connected, though it is difficult to imagine a series composed of payments having all these characteristics. . It is apprehended that to form a series, the payments must have some characteristic in common. " This line of observation in Hanson is in tune with the dictionary meaning of the expression " series " wherein it has been defined as a number, or set, of material things of one kind, ranged in a line, either contiguously or at more or less regular intervals. It seems to us that for any given payment to be one of a series of payments we must be in a position to say even about the very first payment that it is the beginning of series. If we examine the aspect of the first payment, without regard for any other payment and find that the first is not the beginning of a series, we cannot come to the conclusion that the first and the last and those in between constitute a series of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty under s. 17 would depend upon the proportion which the benefit that had accrued to the deceased bears to the total income of the controlled company ascertained on the basis of a three year period immediately preceding the deceased's death. According to the calculations of the Asst. Controller, the total net assets of the controlled company for the three years period amounted to Rs. 6,12,020. The various withdrawals which the deceased effected from his current account with the company over this three year period immediately prior to his death amounted in all to Rs. 3,92,066. The slice under s. 17 of the Act was, therefore, worked out by the Asst. Controller in the, following fashion 3,92,066/ 6,12,020 X 4,11,319= Rs. 2,63,495. This sum of Rs. 2,63,495 arrived at on the above " slice principle " was included as part of the dutiable estate on which estate duty was charged on the company's assets. This amount was, however, subject to certain limitations, with which we are not concerned in this reference. The effect of the Tribunal's decision as well as of our conclusion is the same although on different reasonings. The effect is that Rs. 2,63,495 cannot be included as part of th ..... 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