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1992 (5) TMI 52 - AT - Income Tax

Issues Involved:
1. Domicile of the deceased.
2. Applicability of Sections 15 and 16 of the Indian Succession Act.
3. Taxability of N.R.E. Accounts under the Estate Duty Act.

Issue-wise Detailed Analysis:

1. Domicile of the Deceased:
The primary issue in the appeal was whether the deceased had acquired a domicile in Bahrain by choice, as claimed by the Accountable Person. The Accountable Person provided a letter dated 16-9-1979 written by the deceased expressing her desire to adopt the domicile of Bahrain and settle there permanently. The Assistant Controller of Estate Duty rejected this claim, citing that the deceased was an Indian passport holder, her family resided in India, and she had not acquired any immovable property outside India. The first appellate authority, however, accepted the claim, stating that the deceased had acquired a domicile of Bahrain by choice, as evidenced by the letter and her long habitation in Bahrain.

2. Applicability of Sections 15 and 16 of the Indian Succession Act:
The revenue contended that under Sections 15 and 16 of the Indian Succession Act, the deceased, being a married woman, could not have an independent domicile other than that of her husband. Section 15 states, "By marriage, a woman acquires the domicile of her husband if she had not the same domicile before," and Section 16 asserts, "A wife's domicile during her marriage follows the domicile of her husband." The Tribunal noted that the law is specific and clear, and the deceased, being married, could not have a domicile separate from her husband unless they were separated by a court sentence or the husband was undergoing a sentence of transportation. The Tribunal found that the first appellate authority's reliance on the case of Dr. Ida Bella Scuddar was misplaced, as the circumstances were materially different.

3. Taxability of N.R.E. Accounts under the Estate Duty Act:
The Accountable Person argued that the N.R.E. Accounts maintained by the deceased in India should be exempt from the Estate Duty Act, as the accounts were freely transferable and the interest accrued was not included as income in India. The Assistant Controller of Estate Duty rejected this claim, stating that Rule 8(d) of the Estate Duty Rules clearly applied, and the accounts, though located in India, could not be exempted from estate duty. The Tribunal upheld this view, noting that the deceased's domicile status did not change the fact that the N.R.E. Accounts were located in India and subject to estate duty.

Conclusion:
The Tribunal concluded that the deceased could not have an independent domicile separate from her husband under Sections 15 and 16 of the Indian Succession Act. The Tribunal found that the first appellate authority's decision was incorrect and set it aside. Consequently, the appeal by the revenue was allowed, and the addition of Rs. 6,70,000 in the N.R.E. Account of the deceased was upheld.

 

 

 

 

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