1973 (3) TMI 56 - SC - Indian Laws

Whether on the facts and in the circumstances of the case the sum of Rs. 1, 29, 924 was liable to estate duty as property deemed to pass on the death of the deceased under section 10 of the Estate Duty Act 1953 ? Held that - We affirm the decision of the High Court answering question in the negative and in favour of the assessee

Summary

Issues:
1. Whether the sum transferred by the deceased to his daughter and sons is liable to estate duty under section 10 of the Estate Duty Act, 1953?

Analysis:

The case involved a question of law regarding the liability of a sum of money transferred by the deceased to his daughter and sons to estate duty under section 10 of the Estate Duty Act, 1953. The deceased, a partner in a money-lending and financing firm, had transferred amounts to his children's accounts, which were utilized in the firm's business. The department contended that the deceased continued to enjoy the benefits of the capital transferred, and thus, it should be included in the estate value. The accountable persons argued that the donees had exclusive possession and beneficial enjoyment of the transferred amounts, and section 10 was inapplicable. The Appellate Controller upheld the inclusion of the sum in the estate value, leading to an appeal before the Tribunal.

The Tribunal considered the control and possession of the transferred funds by the donees, who were partners in the firm, and the continued management participation of the deceased. The department argued that the deceased retained effective control over the gifted amounts, thus not being entirely excluded from their possession and benefits. The Tribunal referred to previous decisions highlighting the distinction between outright gifts and gifts within a pre-existing partnership. Relying on the decision in H. R. Munro's case, the Tribunal held that the transferred sum did not fall under section 10 and was not subject to estate duty.

The Supreme Court affirmed the decision of the High Court based on the precedent set by the Controller of Estate Duty v. C. R. Ramanchandra Gounder. The court dismissed the appeal with costs, stating that the question of law had already been concluded by their previous decision. The judgment reiterated the application of the law in determining the liability of transferred sums under the Estate Duty Act, emphasizing the importance of legal precedent in such matters.