TMI Blog1989 (3) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... state Duty Act, 1953. The said provision was the subject matter of two decisions of this court in Ratnakumari Kumbhat v. CED [1975] 101 ITR 572 and CED.v. Smt. S. T. B. Ameen Khaleeli [1983] 143 ITR 679. Though the latter decision in 143 ITR 679 purports to follow the earlier decision in [1975] 101 ITR 572, the latter decision appears to run counter to the view expressed in 101 ITR 572 as regards the true scope and effect of section 46(1)(b) of the Act. In the decision in Ratna kumari Kumbhat's case [1975] 101 ITR 572, while dealing with section 46(1)(b), the court has observed that the said provision consists of two parts, that the first part deals with a case where the consideration for the debt was given by any person who was at any time entitled to any property derived from the deceased and that the other part deals with a case where the consideration for the debt was given by any person amongst whose resources there was at any time any property derived from the deceased. While dealing with the scope of the expression "at any time" occurring in clause (b) of section 46(1), the court pointed out that it is immaterial when the promisee became entitled to or amongst whose resource ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'Resource' means that which supplies some deficiency or some want. 'Resource' does not merely refer to the source of finance, without any antecedence. This also shows that there must be a precedence of the property first and the advance of loan to the deceased subsequently.' The above extract will clearly indicate that the latter decision proceeds on the basis that the derivation of property by the creditor prior to the advancement of the loan to the deceased alone will come within the scope of section 46(1)(b). Thus, there is a direct conflict between the two decisions as to the scope and ambit of section 46(1)(b) read with the proviso thereto. In view of this conflict on the question which is likely to recur frequently, we consider that the conflict must be resolved by a Full Bench. The papers may, therefore, be placed before our Lord, the Chief Justice, for orders as to the posting before a Full Bench." To appreciate the views expressed in the two pronouncements of the Division Benches of this court, referred to in the order of reference, it has become necessary to extract section 46 of the Estate Duty Act, 1953, hereinafter referred to as the Act "46. Further limitation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any property derived from the deceased and that what was required to render a transaction amenable to this clause was possession or holding of property derived from the deceased at some time either before or after the principal transaction of loan, the only limitation being what is contained in the proviso therein under which any consideration which is in excess of the total value of the property derived, by the creditor from the deceased, until the date of death of the deceased would alone escape abatement. The later pronouncement in CED v. Smt. S. T. B. Ameen Khaleeli [1983] 143 ITR 679 (Mad), though it purports to follow the pronouncement in Rathnakumari Kumbhat v. CED [1975] 101 ITR 572 (Mad), made observations indicating that the derivation of property by the creditor prior to the advancement of the loan to the deceased alone will come within the scope of section 46(1)(b) of the Act. The relevant observations found in Ratnakumari Kumbhat v. CED [1975] 101 ITR 572, 583 (Mad) run as follows: "In respect of both the categories the words 'at any time' are used, thereby showing that it is immaterial when the promise became entitled to or amongst whose resources included any prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted that notice must be taken of the fact that the creditor has some property derived from the deceased as part of his resources, then the wide language of the enacting part of section 46(1)(b) was not intended to be applied as it is without qualification. This would be seen from the fact that literally understood any and every property which at some time or other had been derived from the deceased would have the effect of abating the debt to some extent or other. The words in section 46(1)(b) are 'any person who was at any time' entitled to or amongst whose resources there was 'at any time' included, any property derived from the deceased. Ordinarily understood, the expression 'at any time' may mean, however, long before and, however long after. An unrestricted meaning if given to this phrase 'at any time' may even refer to the property derived from the deceased by way of inheritance or testamentary succession. It is obvious, however, that it must only refer to the derivation of property prior to the advance of the debt. This is because at the time at any rate when the property becomes part of the creditor's resources, there may be some nexus between the resources and the conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the loan. That is why, in clause (b) the expression "at any time" have been significantly used. That cannot be easily lost sight of This has been rightly kept in mind in Mrs. Ratnakumari Kumbhat v. CED [1975] 101 ITR 572 (Mad), when the learned judges observed that what was required to render a transaction amenable to this clause was possession or holding of property derived from the deceased at some time either before or after the principal transaction of loan. Of course, it is subject to the condition that the nexus between the loan transaction and the property derived stands established. However, in CED v. Smt. S. T.,B. Ameen Khaleeli [1983] 143 ITR 679 (Mad), restricted meaning has been given to the provision in the passages extracted above, when it is observed, that it must only refer to the derivation of property prior to the advanced of the debt. The observations also indicate that otherwise the nexus cannot be established and there must be precedence of the property first and advance of the loan to the deceased subsequently. We do not find any warrant for putting such a restricted construction on the provision. It may be that the language used in the provision presents s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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