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TMI Blog1976 (3) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... ame to the conclusion that these assets were purchased by the deceased benami in the name of his wife and that they actually belonged to the deceased. Alternatively, the Assistant Controller also held that even if it were to be assumed that the deceased had gifted them to his wife, the subsequent conduct of the deceased in dealing with these assets in his books of account, possessing and enjoying the income therefrom, as if they were his own, clearly attracted the provisions of section 10 of the Estate Duty Act. Accordingly, he included these assets in the principal value of the estate of the deceased passing on the death. The deceased was a partner in a rice-mill for a number of years. On the ground that the running of a rice-mill required various licences and that the partnership firm was not only hulling paddy for others but also purchasing paddy and converting them into rice and selling the same, the Assistant Controller found that the rice-mill business had acquired goodwill and he proceeded to estimate the value of the goodwill. Rejecting the contention of the assessee that the goodwill, if it is to be taken into account, is to be estimated at two years' profit or three yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 6, and not the real owner. In that view, the Tribunal directed the deletion of the value of these assets from the estate of the deceased. On the question of goodwill, the Tribunal considered that, having regard to the fact that the rice-mill had no quota right or any peculiar features of its own, it did not have any goodwill at all and that, therefore, there was no justification for adding the sum of Rs. 9,410 on account of goodwill. The revenue asked for a reference of three questions : one relating to the goodwill, the other relating to the includibility of the assets held by the deceased benami in the name of his wife and the third, the applicability of section 10. But the Tribunal considered that the following question is the only question that could be referred. That question reads as follows : "Whether the value of the properties admittedly standing in the name of the deceased's wife could be included in the principal value of the estate assessable under the provisions of the Estate Duty Act ?" That is the subject-matter of reference in T. C. No. 272 of 1970. On an application filed by the revenue under section 64(3) of the Estate Duty Act, this court di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on paying the consideration unless the person paying the consideration intended to pay or provide such consideration for the benefit of the transferee. The finding in this case being one of benami, we are relieved of the duty to find the intention of the person paying the consideration. The accountable person, therefore, must be deemed to hold the property for the benefit of her husband. That means that the real ownership to the properties is vested in the deceased. Section 41 of the Transfer of Property Act deals with transfer by the ostensible owner. In the case of a benami transaction, the ostensible owner is the benamidar. That section provides that where the ostensible owner transfers the property for consideration, the transfer shall not be voidable on the ground that the transferor was not authorised to make it; provided that the transferee, after taking reasonable care to ascertain that the transferor had power to make the transfer, has acted in good faith. Thus, if a person had no actual or constructive notice of the real title and acted in good faith and purchases the property from a benamidar, the real owner cannot recover the same, though the benamidar could not conve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets now in question belonged to the deceased who died possessed of the same. Section 5 is, therefore, clearly attracted, and the entire value of these assets is includible in the principal value of the estate of the deceased passing on the death. It now only remains to consider the decisions relied on by the Tribunal and some of the other decisions cited at the Bar. In Smt. Shantabai Jadhav v. Controller of Estate Duty [1964] 51 ITR (ED) 1 (AP), the accountable person who was the wife of the deceased, claimed certain jewellery left by the deceased as hers, and did not include the same in the account of the estate filed by her. The Assistant Controller, in the opinion that the accountable person had failed to establish that the consideration for the purchase of the jewellery came out of her stridhana property and that she had no ostensible resources for purchase of the same, treated the property as that of the deceased. When it came on a reference the Andhra Pradesh High Court observed-See [1964] 51 ITR (ED) 1, 3 (AP): "Even assuming that the money for the purchase was found by her husband, it does not mean that he had beneficial interest in the property. Normally, a husba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of the property could be included in the estate of the real owner under section 5 of the Estate Duty Act. Learned counsel for the revenue brought to our notice a decision of the Punjab High Court in Controller of Estate Duty v. M. L. Manchanda [1974] 93 ITR 173 (Punj) in a case relating to a benamidar dying where the question for consideration was whether the assets held by a benamidar could be included in the estate. A Division Bench of the Punjab High Court relying on the aforementioned two decisions of the Andhra Pradesh High Court and an earlier decision of the Allahabad High Court which was overruled in O. S. Chawla v. Controller of Estate Duty [1973] 90 ITR 68 (All) [FB] held that the property had to be treated as the estate of the benamidar on death. In support of this view, the learned judges also sought to rely on a passage in the decision of the Supreme Court in Sree Meenakshi Mills Ltd. v. Commissioner of Income-tax [1957] 31 ITR 28 (SC). We are of the view that the passage quoted from the decision of the Supreme Court was taken out of context and it, therefore, appeared as if the same supported the view expressed by the learned judges in the decision of the Punjab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ets, now in dispute, would pass on the death of the deceased, as the deceased was the real owner and the accountable person was only holding them as benamidar for the real owner. We are, therefore, of the opinion that the assets are to be included under section 5 of the Estate Duty Act itself. On the question of including the value of the goodwill, we are of the view that on the question as framed we could not go into the question whether there was any goodwill at all. As already stated, the Tribunal gave a finding that the rice-mill had no goodwill at all, in view of the fact that there was no quota right nor was there any peculiar feature attached to the rice-mill. The revenue has not sought a reference specifically on the question whether there was any goodwill at all and the reference before us in our opinion could not include also a question of the existence of the goodwill. If there was no goodwill, the addition of Rs. 9,410 could not be justified. In the result, we answer the question in T.C. No. 272 of 1970 in the affirmative and in favour of the revenue, and the question in T.C. No. 405 of 1971 also in the affirmative but against the revenue. In the circumstances, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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