9911796707
TMI Blog1990 (10) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... . 4,57,448 payable to M/s. J.K. Hosiery Factory." 2. The brief facts are that Sir Padampat Singhania died on 18-11-1979, leaving behind certain estates. During the estate duty assessment proceedings, it was contended by the accountable person, Dr. Gaur Hari Singhania, eldest son of Sir Padampat Singhania, that outstanding liability of the wealth-tax in respect of individual estate amounting Rs. 4,54,907 for the assessment years 1975-76,1976-77 and 1977-78 and wealth-tax liability of Sir Padampat Singhania, HUF, amounting to Rs. 27,91,585 for the assessment years 1967-68 to 1972-73 be deducted while computing the value of the estates left by the deceased. The Assistant Controller of Estate Duty had disallowed the same and observed that Sir Padampat Singhania, HUF, was originally having 1/3rd share in the firm M/s J.K. Bankers. The said firm owned a number of immovable properties which were got valued by the WTO through the Departmental Valuation Cell which resulted in huge appreciation in value of these properties culminating into considerable wealth-tax demand in the case of Sir Padampat Singhania, HUF. The HUF was a partner in the said firm up to the assessment year 1972-73. Lat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appreciation in the valuation of the properties held by the said firm as the deceased had accepted at the time of retirement the valuation of the assets shown in the papers and the balance sheet of the said firm, that is, J.K. Bankers. He has further pointed out that the partial partition effected on 2-7-1979 by the deceased before his death was again a managed affair to dilute his property amongst his sons and wife so as to avoid paying the estate duty in case of death of the deceased. He has thus very vehemently stressed that the order passed by the ACED was perfectly correct and justified and should be restored and that of the Controller of Estate Duty (Appeals) be set aside. 3. On the other hand, the learned counsel for the accountable person has relied upon the order of the learned Controller of Estate Duty (Appeals) and stressed that the order passed was perfectly correct and justified and has been very well discussed giving out all the points justifying the details. 4. We have heard the parties at length and have also carefully perused the entire facts and record. It is admitted that the deceased owned property in his individual capacity and in the capacity of HUF. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a partner in his individual capacity from the assessment years 1973-74 to 1977-78. The retirement of the deceased from the said firm had taken place more than two years before his death as he died on 18-11-1979. 6. It is not disputed that as per wealth-tax assessment for the assessment years 1967-68 to 1972-73, the deceased was assessed in the status of HUF and from 1975-76 to 1977-78 in the status of individual and huge wealth-tax liability has been determined and a cerficate for such outstanding demand dated 6-1-1986, issued by the ITO, Central Circle, Kanpur, has also been filed in the compilation. From the above facts, it stands established that the outstanding wealth-tax liabilities relate to the period when the deceased was a partner in the said firm representing his HUF up to the assessment year 1972-73 and in individual Status for the assessment years 1975-76 to 1977-78. Section 44 of the Estate Duty Act, 1953 provides that in determining the value of the estate for the purpose of estate duty, allowance shall be made for funeral expenses (not exceeding Rs. 1,000) and for debt and encumbrances... Consequently, any liability for debts and encumbrances on the estate has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re Tax Act, or the Gift-tax Act, which is outstanding on the relevant date and is claimed by the assessee in appeal, revision or other proceeding as not being payable by him, is to be excluded. There is no such corresponding provision in the Estate Duty Act. Consequently, the provisions of section 2(m)(iii) of the Wealth-tax Act cannot be imported in computing the net estate of the deceased for the purposes of Estate Duty Act. In the case of Estate Duty Act, section 44, which will be operative and thus provides a deduction to be allowed while computing the net estate of the deceased under this section of debts and encumbrances have to be allowed. Here in this case, admittedly all this liability of wealth-tax in the capacity of karta of the HUF and in his individual capacity is nothing but a debt and encumbrance on the estate and there is no scope for the revenue but to allow the same while computing the net estate of the deceased for the purposes of estate duty. Accordingly, we are of the opinion that the learned Controller of Estate Duty (Appeals) was perfectly correct and justified in directing the ACED to allow the same after proper verification. The issue is decided accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeming provision and can be applied only to cases of income-tax and not to any other alive Taxation Law. In absence of any specific provision, it is just simple and ordinary Hindu Law which has to be applied by which the assessee is admittedly governed. Under Hindu Law, there is no prohibition for a partial partition. In this case, there is sufficient evidence to prove that a partial partition had taken place and the same is not disputed. The only dispute was about the legal position of that partition. As there is no corresponding provision to section 171(9) of the Income-tax Act, 1961 or the Estate Duty Act, we are of the opinion that the said deeming provision cannot be imported to estate duty matters as under Hindu Law, the karta of a HUF can make a partial partition at any time, the deceased was perfectly competent to do the same. Besides, there is also one more circumstance in the case which goes in favour of the deceased. Section 171(9) of the Income-tax Act was introduced on the estate from 1-4-1980 with retrospective effect from 31-12-1978. Admittedly, the partial partition had taken place on 2-7-1979 and even the deceased had died on 18-11-1979. Under these circumstances, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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