TMI Blog1981 (4) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... e original gift' made by the deceased to his daughter and the subsequent loan given by her to him was established and, therefore, the provisions of section 46 Of the Estate Duty Act, 1953, for abatement could not be attracted, is justified in, law?" Out of the these two questions, question No. 1 referred to us at the instance of the accountable person is covered by a decision of this court in Smt. Shantaben Narottamdas v. CED and Mancklal Premchand Shah v. CED [1978] 111 ITR 365. Following the said decision, we answer this question in the negative and against the accountable person. So far as question No. 2 referred to us at the instance of the revenue is concerned, the relevant facts are as follows Deceased, D. C. Karaka (hereinafter r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roller, however, relying on s. 46 of the F.D. Act, rejected the claim of the account. able person holding that as the amount received by Mrs. Karaka by way of gift from the deceased during his lifetime exceeded the amount of Rs. 19,000, the said sum of Rs. 19,000 cannot be allowed as deduction under s. 44 of the E.D. Act. The Appellate Controller having confirmed the view taken by the Asst. Controller, the accountable person carried the matter in appeal to the Tribunal. The Tribunal allowed, the claim of the accountable person holding that there was no link or nexus between the original gift made by the deceased to Mrs. Karaka and the subsequent loan given by her to him and, therefore, the provisions of s. 46 regarding abatement were not at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with the gifts made by the deceased to Mrs. Karaka and, therefore, the debt of Rs. 19,000 which has remained unpaid cannot be held to have abated under s. 46 of the E. D. Act. In support of his contention, Mr. Patel has relied on the decision of this court in Rasiklal Lallubhai Shah v. CED [1980] 124 ITR 212. Section 44 of the Act, in so far as it is material for the purposes of the instant case, provides that in determining the value of an estate for the purpose of estate duty, allowance shall be made for debts and incumbrances subject to the condition that such debts were incurred or incumbrances were created bona fide for. full consideration in money or money's worth, wholly for the deceased's own use and benefit, and take effect ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 16 in relation to the purchase or provision of an annuity or other interest, no abatement, shall be made in respect of the excess. (2) Money or money's worth paid or applied by the deceased in or towards satisfaction or discharge of a debt or incumbrance in the case of which sub-section (1) would have had effect on his death if the debt or incumbrance had not been satisfied or discharged, or in reduction of debt or incumbrance in the case of which that sub-section has effect on his death shall, unless so paid or applied two years before the death, be treated as property deemed to be included in the property passing on the death and estate duty shall, notwithstanding anything in section 26, be payable in respect thereof accordingly. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n s. 46(1)(b). We, therefore, do not consider it necessary to deal with the argument of Mr. Raval for the respondent that the debt in question abates under s. 46(1)(a) also. For a case to fall within the ambit of s. 46(l)(b), the consideration need not consist of the property derived from the deceased but must have been paid by a person who was at any time entitled to, or amongst whose resources there was at any time included, any property derived, from the deceased. It is not in dispute that in the instant case, Mrs. Karaka had received cash gifts amounting to Rs. 32, 1 00 from the deceased. A loan of Rs. 20,000 was taken by the deceased in April, 1960, after the said gifts were made. There is, therefore, no doubt that the loan was given b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viding the consideration for the loan in the sense that the person providing the consideration for the loan must be the person who was at any time entitled to or amongst whose resources there was at any time include any property derived from the deceased. Relying on the above observation, Mr. Patel's contention was that unless it is proved that the loan flowed from the property derived from the deceased s. 46(1)(b) cannot apply. Mr. Patel overlooks the distinction between cl. (a) and cl. (b) of s. 46(1). We are not at present examining the case from the point of view of cl. (a). In so far as cl. (b) is concerned, there is no question of a direct nexus between the loan transaction and the derivation of the property of the deceased by the per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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