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TMI Blog1974 (7) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... y. Total value of such joint Hindu family property was Rs. 4,16,240 out of which the interest of the deceased was only one-half. The Assistant Controller of Estate Duty, Kanpur, held that according to the Hindu law the deceased could not form a joint Hindu family with his daughter-in-law and the three grandsons. As there did not exist any joint Hindu family, any declaration made by the deceased that he was throwing his assets and properties into the family hotchpotch was of no consequence. The assets alleged to have been thrown by the deceased in the family hotchpotch continued to belong to him in his individual capacity and computed the value of the assets left by the deceased as Rs. 7,09,824. The accountable person then filed an appeal before the Zonal Appellate Controller of Estate Duty. The Zonal Appellate Controller, by his order dated 22nd March, 1967, allowed the appeal in part. He accepted the contention of the accountable person that the deceased Hindu undivided family consisted of himself, his widowed daughter-in-law, Smt. Prakashwati Devi and the three grandsons. Accordingly, he had only one-half share in the value of such assets. He also issued directions for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uation of the gold at Rs. 115 per tola in view of its finding that at the material time the value of the gold was at Rs. 62.50 per 10 grammes ? 5. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that there was proper presentation of the appeal by the department and the same was maintainable as such ? 6 Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is right in holding that full value of the personal estate of the deceased is includible in the estate duty assessment or only half of the said estate is includible in the estate duty assessment being half the share of the deceased in H.U.F. properties impressed with the character of the H.U.F. property through the document dated November 13, 1961 ? 7. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the deceased was not competent in law to bring into existence a Hindu undivided family consisting of himself, his daughter-in-laws and his grandsons ? 8. Whether, out of Rs. 62,567 being the refund given by the income-tax department to the H.U.F., a sum of Rs. 31,288 held by the Appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w its amount or value, he may state that such property exists, but he does not know the amount or value thereof and that he undertakes, as soon as the amount and value are ascertained, to bring a supplementary account thereof and to pay both the duty for which he may be liable in respect of such property and any further duty payable by reason thereof for which he may be liable in respect of the property mentioned in the original account. (5) Where two or more persons are accountable, whether in the same capacity or in different capacities, for estate duty in respect of any property passing on the death of the deceased, they shall be liable jointly and severally for the whole of the estate duty on the property so passing ? " According to sub-section (1) every legal representative and every person, in whom an interest in the property so passing on the death of the deceased vests, has been made accountable for the whole of the estate duty on the property passing on the death of the deceased, but a provision has been made that such liability will not exceed the estate of the deceased which is actually received by the person concerned or would have been received by him but for his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability of an accountable person to account for the property of the deceased under the Estate Duty Act, 1953. Sub-section (1) of section 24B provides that where a person dies, his executor, administrator or other legal representative shall be liable to pay from out of the estate of the deceased person, to the extent to which the estate is capable of meeting the charge, the tax assessed as payable by such person or any tax which would have been payable by him under the Act, if he had not died. The section casts the responsibility for payment of the tax on the legal representative of the deceased. It is obvious that where there are more than one such representative, the expression " legal representative " would include within its ambit all the legal representatives. The section does not lay down whether the liability of the legal representatives to pay tax payable by the deceased would be joint or several. Sub-section (2) lays down that where a person dies before the publication of the notice referred to in sub-section (1) of section 22 or before he is served with a notice under sub-section (2) of section 22 or under section 34, his legal representatives shall, on the service of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder paragraph 8(ii), headed as gifts under section 9(1). Section 9(2)(b) of the Estate Duty Act lays down that nothing under sub-section (1) is to apply to gifts which are proved to the satisfaction of the Controller to have been made by the deceased as a part of his normal expenditure, subject to a maximum of Rs. 10,000 in value. The Appellate Controller of Estate Duty, after scrutinising the books, came to the conclusion that from out of the sum of Rs. 22,453 mentioned above, the amount of more than Rs. 10,000 represented such gifts which could be said to be the normal expenditure of the deceased. He, therefore, directed that to the extent of Rs. 10,000 those gifts were saved by the provisions of section 9(2) of the Estate Duty Act. Besides this, he found that the first item, viz., the amount of Rs. 5,644 alleged to have been gifted one day before the death of the deceased included a sum of Rs. 400 paid as doctor's fee. This amount, i.e., the sum of Rs. 400, should not have been added as an item of gift made within two years of the death of the deceased. In the same time way the amount of Rs. 1,800 represented miscellaneous expenses and that there was nothing on the record to sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and even if it was so, the limit of Rs. 10,000 is there in section 9(2)(b) of the Estate Duty Act, 1953. In fact even the figure of the deceased's expenditure for the earlier few years were not given to us so as to enable us to examine whether the deceased actually gifted similar amounts on certain occasions in those years. There is, thus, no merit in the accountable person's appeal, on this issue. As regards the revenue's appeal also we are of the opinion that the normal expenditure of the deceased contemplated in section 9(2)(b) means the expenditure that an assessee would normally incur on particular occasions including the normal expenditure from year to year. It would certainly be not confined to the normal expenditure from year to year only. Having regard to this aspect of the matter we agree with the Zonal Appellate Controller that rich persons with religious bent of mind do spend their moneys to the capacities on the occasion of Kumbh Mela and, therefore, the expenditure in dispute forms part of the normal expenditure of the decased. The revenue ground is, therefore, rejected. ". These observations clearly imply that the Appellate Tribunal agreed with the Zonal Appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased had within two years of his death made a gift of 250 tolas of gold. Computing the value of the gold so gifted at the rate of Rs. 140 per tola, he added a sum of Rs. 35,000 to the value of the estate passing on the death of the deceased. The Appellate Controller of Estate Duty pointed out that in computing the value of gold the Assistant Controller had instead of taking its value on the date of Babu Lal's demise had taken into consideration its rate (Rs. 140 per tola) prevailing at the time of the alleged gift. The rate of gold at the time of Babu Lal Kedia's death was Rs. 115 per tola. Accordingly, value of gold which had to be included on the value of the property passing on the death of Babu Lal had to be reduced by a sum of Rs. 6,250. The Appellate Tribunal agreed with the Zonal Appellate Controller that for purposes of estate duty the value of gold had to be calculated on the basis of its rate as prevailing on the date of the death of the deceased and not that on the date of the alleged gift. Section 5 of the Estate Duty Act, 1953, provides that in the case of a person dying after the commencement of the Act, there shall be levied and paid upon the principal value, ascerta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al manner. If at the time of death of a person there is a law providing that the goods cannot be sold in an open market at a price higher than a particular price they cannot be valued at a price higher than that which could be legally charged for it notwithstanding that persons may be available who may be willing to pay a price higher than its controlled price. Accordingly, the price which could be legally charged, if the gold had been sold in the open market on the date of the death of Sri Babu Lal Kedia, could alone be taken into consideration. The authorities under the Estate Duty Act would not be concerned with the illegal sale of gold or its illegal price. The admission of the accountable person that on that date gold could fetch a price of Rs. 115 per tola merely meant that notwithstanding the controlled price, there were persons who could have purchased gold, at that rate. That admission, however, could not entitle the authorities under the Estate Duty Act to value gold on the basis of such illegal price. We are, therefore, of opinion that after finding that on the relevant date the value of the gold was Rs. 62.50 per 10 grammes, the Tribunal was not right in sustaining the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vided between Babu Lal Kedia and his son, Jiwan Ram. The business, Gangadhar Babu Lal, was given exclusively to Sri Babu Lal Kedia, whereas that carried on in the name of Babu Lal Jiwan Ram was given to Jiwan Ram exclusively. At that time the parties agreed that they would further divide all other movable and immovable properties belonging to the family. Consequently, on 28th April, 1945, Babu Lal Kedia, Jiwan Ram on his own behalf and on behalf of his sons and Smt. Kamli Devi, wife of Babu Lal and stepmother of Jiwan Ram, executed a partition deed dividing all the movable and immovable properties amongst themselves and in the manner specified therein. The executants recognised and accepted the partition of the business already effected between Babu Lal and Jiwan Ram. It thus appears that on 28th April, 1945, there was a complete disruption in the family of Babu Lal. Thereafter, Babu Lal continued to be assessed to income-tax as an individual. Subsequently, Kamil Devi and Jiwan Ram died in the years 1948 and 1949. Thereafter, the only members of the disrupted members of the joint Hindu family that remained were Babu Lal, his daughter-in-law, Smt. Prakashwati Devi, and the three gra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he accountable person. In second appeal the Income-tax Appellate Tribunal disagreed with the Appellate Controller and after setting aside his order on this point, it restored the order made by the Assistant Controller. It appears that before the Assistant Controller it was urged on behalf of the accountable Person that after disruption of the family in the year 1945, there was a reunion as a result of which Babu Lal, his daughter-in-law, Smt. Prakashwati, and the three grandsons, viz, Vijai Kumar and his two brothers, again became members of a joint Hindu family. However, in view of the fact that under the Hindu law in a case where the family stood disrupted at the instance of the grandfather and his son, it could not get reunited as a result of an agreement between the grandfather and his grandsons, the plea of reunion was specifically given up by the accountable person before the Regional Appellate Controller and the Income-tax Appellate Tribunal. As a matter of fact before the Appellate Controller, the accountable person urged that the Assistant Controller had misunderstood his case when he made a reference to reunion of the family as a result of an agreement between Babu Lal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed that there was a disruption in the joint Hindu family, between Babu Lal on the one hand and Jiwan Lal and his sons on the other, Babu Lal ceased to be a member of the joint Hindu family consisting of Jiwan Lal and his sons and as such he could not throw his individual property in the common hotchpotch of the coparcenary of his grandsons of which he was not a member. Learned counsel for the accountable person then took up a stand, which was not taken either before the Appellate Controller or before Income-tax Appellate Tribunal, viz., that notwithstanding the partition deed executed in the year 1945, the joint family consisting of Babu Lai, his son, Jiwan Ram, and the grandsons actually never got disrupted. He urged that during the proceedings for the assessment of Gangadhar Babu Lal (HUF) certain refund amounting to Rs. 62,567 (the subject-matter of the next question) became due to the family. This amount also represented one of the assets belonging to the joint Hindu family which was never partitioned. Relying upon the case of Jogendra Nash Rai v. Baladeo Das Marwari, he contended that qua this property the family of Babu Lal, his son, Jiwan Ram, and the grandsons, Krishna Ku ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken place or that the parties intended to continue as a member of a joint Hindu family. The amount of Rs. 62,567 which became refundable in respect of the assessment of the erstwhile dissolved joint Hindu family, would belong to the members of that family in accordance with the shares received by them on partition. Such members would be entitled to that money as the tenants-in-common, rather than in their status of joint tenants. Accordingly, Babu Lal had half share in the refund amount of Rs. 62,567 and the remaining half belonged to the other members of the erstwhile joint Hindu family. In the result, the Tribunal was right in holding that after partition no Hindu undivided family consisting of Babu Lal, his daughter-in-law and his grandsons came into existence and that from out of Rs. 62,567, the refund and admissible in connection with the assessment of the Hindu undivided family, only a sum of Rs. 31,288 was includible in the estate duty assessment of the deceased. In the result we answer the various questions referred to us as follows :-- Question No. 1 in the affirmative and in favour of the department. Question No. 2 in the affirmative and in favour of the depart ..... X X X X Extracts X X X X X X X X Extracts X X X X
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