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TMI Blog1967 (4) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... reinafter referred to as the " deceased "), the father of the respondent died on May 17, 1957. The deceased was the owner of a palace known as " Jorawar Palace ". In the year 1954, the deceased sold the palace to the Government of Bombay for a sum of Rs. 15,00,000. In January, 1955 the possession of this palace was handed over to the Government of Bombay. A sum of Rs. 5,00,000 was paid by the Government of Bombay to the deceased immediately on taking over possession and the balance of Rs. 10,00,000 was to be paid to the deceased by the Government of Bombay in three equal annual instalments. The respondent, who is the son of the deceased and the accountable person of the estate, contended before the Deputy Controller of Estate Duty that, out of the aforesaid sum of Rs. 10,00,000 due from the Government of Bombay, a sum of Rs. 9,00,000 was gifted to him by the deceased on May 3, 1955, and, therefore, the amount should not be included in the estate of the deceased. In support of this claim, the respondent produced before the Deputy Controller a photostat copy of a letter dated May 3, 1955, addressed by the deceased to the respondent. The Deputy Controller rejected the contention of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board of Revenue stated a case for the opinion of the High Court on the following question of law : " Whether, on the facts and in the circumstances of the case, the gift of Rs. 9,00,000 should be regarded as having been made within two years of the death of the deceased and liable to estate duty ?" At the hearing of the reference it was conceded on behalf of the respondent that section 130 of the Transfer of Property Act was applicable to the case but it was argued that the provisions of that section had been complied with, that the letter of the deceased dated May 3, 1955, itself effected the gift and the amount of Rs. 9,00,000 was not liable to be included in the estate of the deceased for the purpose of estate duty. The High Court held that the provisions of section 130 of the Transfer of Property Act applied to the case and the letter dated May 3, 1955, manifested clearly the intention of the deceased to make the gift of Rs. 9,00,000 to the respondent and that intention was sought to be carried out and effected by that letter. The High Court accordingly answered the question in favour of the respondent. Section 130 of the Transfer of Property Act is to the following e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... writing signed by the deceased validly and effectively transferring the actionable claim in respect of Rs. 9,00,000 to the respondent or whether the said letter dated May 3, 1955, was a mere proposal or expression of an intention of the deceased to make a gift of the said sum to the respondent. It is necessary at this stage to reproduce the letter of the deceased dated May 3, 1955, which is to the following effect : " My dearest Iqbal, God Bless you You must be remembering that when I promised to pay you Rs. 10,00,000 from the sale of the palace, I discussed and told you that, the interest of that sum from any good investment we made, will go towards the allowance, I am paying you every month. In other words, like I am paying you from the monthly rent income of the shops, buildings, etc., you know after deducting the rent, I pay the remaining sum of your monthly allowance. In the same way I suggested the new interest or such other income from this palace money also. I had been thinking since some time of avoiding any complication or brain work and within every consideration of my age, life and everything, it would be less troublesome for me and for you if I took anothe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u from the monthly rent income of the shops, buildings, etc., you know after deducting the rent, I pay the remaining sum of your monthly allowance. In the same way I suggested the new interest or such other income from this palace money also. " The next portion of the letter shows that the deceased had thought over the matter afresh and came to two conclusions, namely, (1) that instead of retaining the amount of Rs. 10,00,000 and merely paying the income thereof or placing any restrictions on the corpus of the property and also in consideration of the trouble and anxiety the deceased would have to undergo for investing the amount in proper securities, the deceased would hand over the corpus to the respondent without any restrictions or without any conditions, and (2) instead of paying the entire amount of Rs. 10,00,000, the deceased would retain Rs. 1,00,000 therefrom and hand over the balance of Rs. 9,00,000 " without any restrictions or arrangement ", so that " you can do what you like with your Rs. 9,00,000 and I have no worry to discuss your investments ". But there is nothing in the letter to suggest that the deceased was making a transfer of the amount of Rs. 9,00,000 in p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e letter dated September 19, 1955, written by the deceased to the Bombay Government falls within the two years' period referred to in section 9 of the Estate Duty Act, the gift of Rs. 9,00,000 should be regarded as being chargeable to estate duty and the question of law referred to the High Court must be answered against the respondent and in favour of the Controller of Estate Duty, Gujarat. On behalf of the respondent Mr. Bhaba referred to an affidavit of Mr. J. P. Thacker of Messrs. Mulla and Mulla dated December 23, 1959, in which he stated that " some time in May, 1955, I was called by His Late Highness at his residence in Bombay and he told me that he had made a gift to his son Iqbal, the present Nawab of Palanpur, of a sum of Rs. 9 lakhs, out of the sum of Rs. 10 lakhs, being the balance of the purchase price of the said Joravar Palace which was due and payable by the State of Bombay. Learned counsel also referred to the draft of two letters dated May 13, 1955, produced along with the affidavit of Mr. Thacker. But it is admitted for the respondent that the deceased did not sign either of these draft letters on May 13, 1955, but that the letter to the Bombay Government was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay 3, 1955. We accordingly reject the argum ent of the respondent on this aspect of the case. As regards the question whether a part of an actionable claim can be the subject-matter of a gift or not, the view taken by the Central Board of Revenue is that the debt was capable of partition and there was no valid transfer of the sum of Rs. 9,00,000 prior to September 19, 1955, when the debt wa s actually partitioned. The High Court, however, has overruled the view of the Central Board of Revenue and held that there is nothing in section 130 of the Transfer of Property Act or any other portion of that Act which prohibits the transfer or gift of a part of an actionable claim and, therefore, such transfer of a part of an actionable claim was permissible in law. It is not, however, necessary for us, in the present appeal, to express any opinion on this aspect of the case or to examine whether the view taken by the High Court on this point is correct. For the reasons already expressed we consider that, in the facts and circumstances of the case, the gift of Rs. 9,00,000 should be regarded as having been made within two years of the death of the deceased and was liable to estate duty. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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