1973 (10) TMI 6 - HC - Income Tax

Estate Duty Act 1953 - 1. Whether on the facts and circumstances of the case the inclusion of the value of cash gifts of Rs. 10, 000 each made by the deceased in favour of the minor daughters by applying the provisions of section 10 of the Estate Duty Act 1953 is valid in law ? 2. Whether on the facts and circumstances of the case the inclusion of Rs. 15, 000 which was a deposit made by the donee in the firm of Messrs. T. Govinda Rao and Sons as property belonging to the deceased by applying the provisions of section 10 of the Estate Duty Act 1953 is valid in law ? - question No. 1 is answered in the affirmative and against the accountable person. Question No. 2 is answered in the negative and in favour of the accountable person

Summary

Issues:
1. Validity of inclusion of cash gifts made by the deceased to minor daughters under section 10 of the Estate Duty Act, 1953.
2. Validity of inclusion of a deposit made by a donee in the firm of the deceased under section 10 of the Estate Duty Act, 1953.

Analysis:
The judgment delivered by the High Court of Karnataka addressed two main issues referred by the Income-tax Appellate Tribunal. The first issue involved the validity of including cash gifts of Rs. 10,000 each made by the deceased to his minor daughters under section 10 of the Estate Duty Act, 1953. The deceased had given these gifts to his daughters, and the fixed deposits were held jointly with the daughters and the deceased. The court held that since the fixed deposits were in the joint names of the deceased and his minor daughters, the inclusion of the cash gifts was valid under section 10 of the Act. The court rejected the argument that the accrued interest should not have been included, stating that it was not a question referred for opinion and was not raised before the Tribunal.

The second issue revolved around the validity of including a deposit of Rs. 15,000 made by the deceased's adult son in the firm of which the deceased was a partner. The court referred to previous Supreme Court decisions and concluded that in such cases, the provision of section 10 is not applicable. Therefore, the court ruled in favor of the accountable person regarding the inclusion of the deposit made by the adult son in the firm. The judgment highlighted that the Supreme Court decisions provided clear guidance on this matter.

In conclusion, the High Court answered the first question affirmatively, validating the inclusion of cash gifts made by the deceased to his minor daughters under section 10 of the Estate Duty Act. On the second question, the court answered negatively, stating that the inclusion of the deposit made by the adult son in the firm was not valid under section 10. The parties were directed to bear their own costs, bringing closure to the legal proceedings in this case.