1993 (10) TMI 86 - SC - Income Tax

Scope and interpretation of section 50B of the Estate Duty Act 1953 - Held that - As to the requirement of a strict construction a distinction would perhaps have to be made between a provision imposing a tax as from provision dealing with or relating to a tax. It is the essential nature of the provision that has to be considered its primary or subordinate place in the scheme of the enactment. The interpretation of section 50B con tended for by the accountable person and accepted by the High Court in our opinion is an eminently arguable one though another view may also be possible. The Estate Duty Act 1953 was itself repealed in the year 1985. The question raised is therefore no longer of any general public importance. If two views are possible on the scope and construction of section 50B and one of them has appealed to and been accepted by the High Court and the view cannot also be said not to advance the cause of justice there is hardly any justification to interfere where the Act itself has since ceased to exist. The question of law raised in the appeal is really sterile as it cannot arise hereafter. Appeal dismissed.

Summary

Issues:
Interpretation of section 50B of the Estate Duty Act, 1953 regarding the payment of estate duty from proceeds of property transfer for claiming rebate.

Analysis:
The appeal before the Supreme Court involved the interpretation of section 50B of the Estate Duty Act, 1953, in the context of a claim for rebate by the accountable person, who had paid capital gains tax from the proceeds of property transfer. The Revenue contended that the duty must be paid directly from the proceeds of transfer, while the respondent argued for a liberal interpretation, emphasizing substantial compliance. The High Court accepted the respondent's interpretation, stating that payment "towards the estate duty" included indirect payments for the purpose of estate duty. The Court noted that the borrowing was solely for paying the duty, and the subsequent transfer of shares was to discharge the loan, supporting the respondent's claim for rebate.

The Revenue argued that even if the duty was paid indirectly from the transfer proceeds, no rebate under section 50B was permissible, citing the strict construction of taxing provisions. However, the respondent highlighted the significance of payment "towards estate duty," suggesting that non-direct payments could qualify for the rebate if the proceeds were substantially used for the duty. The Court acknowledged the arguable nature of both interpretations but leaned towards the respondent's view accepted by the High Court. Given that the Estate Duty Act was repealed in 1985, the Court deemed the issue no longer of public importance and declined to interfere with the High Court's decision.

In conclusion, the Supreme Court dismissed the appeal without costs, directing the accountable person to calculate the rebate under section 50B without entitlement to interest. The Court's decision was based on the lack of general public importance of the issue post-repeal of the Estate Duty Act, emphasizing the acceptance of the High Court's interpretation and the absence of sufficient grounds for interference.