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TMI Blog1990 (4) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... hat amount in the firm of which the deceased was a partner and that amount continued to remain invested as a deposit in the firm till the death of Ayyamuthu Pillai. Besides, the deceased had also gifted another sum of Rs. 50,000 to his granddaughter, Nalinakumari, on November 6, 1967, and she too deposited the amount gifted to her, in the firm in which her grandfather was a partner and that amount also remained deposited in that firm till the demise of her grandfather. The accountable person filed an estate duty account disclosing the principal value of the estate of the deceased at Rs. 2,05,598. Applying section 10 of the Estate Duty Act, 1953 (hereinafter referred to as the "Act"), on the ground that the donees had not taken possession of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atore, preferred an appeal before the Tribunal. Applying the principle of the decisions in Radhabai Ramchand v. CED [1975] 98 ITR 660 (Mad) and CED v. S. M. M. Subramanian Chettiar [1975] 99 ITR 400 (Mad), the Tribunal held that under section 10 of the Act, the Assistant Controller was justified in including Rs. 1,00,000 to the principal value of the estate and that the Appellate Controller was not right in directing the deletion of the same. That is how this reference at the instance of the accountable person, under section 64(3) of the Act, has come before this court on the following question of law ; "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that the sum of Rs. 1,00,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... half share of his father. On the death of the donor, his widow was taken in as a partner on the one-fourth share and it was in the background of these facts that the question arose whether the sum of Rs. 1,50,000 credited in the accounts of the son and the wife could be included in the principal value of the estate of the deceased. The Tribunal took the view that section 10 of the Act would not stand attracted and the sum of Rs. 1,50,000 could not also be included in the property passing on the death. of the donor and this view was also confirmed by the High Court on a reference, On further appeal to the Supreme Court, it was pointed out that the benefit in the property, viz., the money gifted, which the donor was enjoying and continued to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any benefit to him by contract or otherwise. It makes no difference whether the donee is a partner in the firm from before or is taken as such at the time of the gift or he becomes a creditor of the partnership-firm by allowing it to make use of the gifted property for the purposes of the partnership." Utimately, the Supreme Court held that the Tribunal as well as the High Court was right in holding that the amounts gifted should be excluded from the principal value of the estate as section 10 could not be applied. On the facts of this case, we are of the view that the aforesaid principles laid down by the Supreme Court would be applicable, as the use of the moneys by the firm of which the donor was a partner is not in any manner referabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ossession and enjoyment of the amounts gifted to them or that they had not retained the same to the entire exclusion of their father (donor). It was further pointed out that there was a failure on the part of the High Court to appreciate that the interest which the donor retained in the amounts gifted and invested by the donees in the partnership in which the donor was a partner is not an interest which can be said to be related to the gift. In the context of the undisputed factual position obtaining in this case, it follows that the circumstance that the firm, of which the donor was a partner, made use of the amounts gifted, would not mean that he was allowed to derive or enjoy any benefit as such in the amounts gifted, referable or relata ..... X X X X Extracts X X X X X X X X Extracts X X X X
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