TMI Blog1984 (12) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the circumstances of the case, the Appellate Tribunal is justified in holding that section 10 of the Act is applicable in so far as the lands gifted to the daughters of the deceased were concerned ?" In the course of inquiry, the first daughter of the deceased, Seshayamma and Ammaji, all the three surviving daughters, were examined. They deposed that the donees had received profits from the two parcels of land. The donor (deceased) had paid them to the donees (daughters). They have no complaint to make in this regard. It was found in the accounts of M/s. Jaipur Sugar Factory Limited, there was an amount of Rs. 1,10,000 credited to the deceased's account. A letter of the deceased dated April 3, 1970, addressed to the two daughters (the donees) showed that the amount belonged to the donees. There was another letter dated June 25, 1966, addressed to the income-tax authorities, relating to the assessment year 1965-66, and in that the deceased represented that the lands were managed by him on behalf of the donees. The evidence adduced by the daughters, the two letters and other cognate circumstances were juxtaposed along with the fact that no accounts were maintained by the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fers to the possession of the property by the donee to the exclusion of the donor. The second part shows the donee continued (retained) and the donor was excluded from benefit under a "contract or otherwise". "As a matter of construction" the Supreme Court held (at page 502) "we hold that the words 'by contract or otherwise' in the second limb of the section will not control the words 'to the entire exclusion of the donor' in the first limb. The court could have interpreted in another way (which it is not necessary to dilate). In CED v. Kanakasabai [1973] 89 ITR 251 (SC), section 10 was considered from the perspective of sub-division of the section in three parts as discussion at page 257 shows : -"It was contended on behalf of the assessee that the expression on any benefit to him by contract or otherwise in section 10 must be in the property settled and not a benefit arising from the transaction resulting in the gift. To put it differently, the assessee's contention was that the benefit by contract or otherwise must be referable to the property gifted because all the earlier conditions stipulated in the section refer to the property gifted. If it was otherwise, the counsel for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. Advocate's fee Rs. 300. ANJANEYULU J. - I agree with my learned brother that this reference should be answered in favour of the assessee. I would, however, like to make a few observations. Revenue contends that section 10 of the Estate Duty Act is applicable in this case, because the conditions set out in the second part of the said section were not satisfied. There is no dispute that the gifts made by the deceased were true and valid and possession was also handed over to the donees when the gifts were made on October 25, 1967. The first part of section 10 is, therefore, not attracted. It is said that the second part of section 10 is attracted as, according to the Revenue, the facts disclosed that the donees did not retain possession and enjoyment of the property gifted to the entire exclusion of the deceased donor or of any benefit to him by contract or otherwise. The Revenue found that the two daughters of the deceased to whom gifts were made in the year 1957 were living outside the State and, therefore, the deceased was managing the properties gifted to his two daughters. The daughters, who were examined on oath, admitted that they had been receiving the entire income r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to indicate that the deceased derived any benefit from the gifted properties. The inference of misappropriation by the deceased of a part of the income payable to the two daughters is based on no evidence and is unsustainable. That itself is sufficient to oust the application of the second limb of the second part of section 10. It is not merely enough to show that the deceased was deriving some kind of benefit from the gifted properties. It must be shown that such benefit was derived pursuant to any "contract or otherwise" occurring in the second limb of the second part of section 10. In CED v. R Kanakasabai [1973] 89 ITR 251 (SC), to which my learned brother has already made a reference, the Supreme Court held that, in order to attract section 10, the benefit to the donor by contract or otherwise must be referable to the property gifted and it was not sufficient that the donor derived a benefit arising from the transaction resulting in the gift. In the present case, there is nothing to show that the benefit allegedly derived by the deceased is referable to the property gifted. The mere allegation that some benefit was derived by the deceased is not sufficient to attract the applic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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