TMI Blog1977 (10) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... 1958, and on the same day another sum of Rs. 25,000 to Saroja. Balaji, Govinda, Anusuya and Saroja are the children of the deceased. The deceased then borrowed from Balaji on March 3, 1960, Rs. 65,000, from Govinda another sum of Rs. 65,000 on the same day and from Anusuya and Saroja Rs. 25,000 each on the same date. So at the time of his death there were liabilities to the extent of Rs. 1,80,000. The creditors to whom the deceased owed these monies transferred their right to collect them to a firm called Balaji No. 2 on February 10, 1962. So at the time of the death, the liability of the deceased was towards the firm. No suggestion was made at any time that the transfer by the original creditors to the firm was sham or did not in fact take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, the Appellate Tribunal was right in law in holding that the debts amounting to Rs. 1,20,000 are not hit by the provisions of s. 46(1) or s. 46(2) of the E.D. Act ?" These two questions have not been happily worded ; in fact they are most confusing ; we will go further and say that the first question is ununderstandable. But it is agreed that what is meant by the first question is that whether on the facts and in the circumstances of the case s. 46 is attracted and whether any abatement can be made for the debts that were owing by the deceased at the time of his death, namely, Rs. 1,80,000 by applying the provisions of s. 46. The second question too is confusing because it mentions a figure of Rs. 1,20,000. How this figure had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and benefit and take effect out of his interest, or (b) for any debt in respect whereof there is a right to reimbursement from any other estate or person, unless such reimbursement cannot be obtained, or (c) more than once for the same debt or incumbrance charged upon different portions of the estate, or (d) for debts incurred by or on behalf of the deceased by way of dower, to the extent to which such debts are in excess of rupees five thousand, and any debt or incumbrance for which an allowance is made shall be deducted from the value of the property liable thereto. Explanation.--For the purposes of this section, 'funeral expenses' include all expenses which may have to be incurred in connection with the sraddha or barsi c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 a 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. (3) The provisions of sub-section (2) of section 16 shall have effect for the purpose of this section as they have effect for the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reditor, we must clarify this by stating immediately that the firm is not a legal entity like a company and it must be taken that the partners of the firm are the creditors of the deceased. That being so, Govinda and Balaji will continue to be creditors of the deceased. But in order that the provisions of s. 46 can be applied we are of the view that the creditors in their capacity as partners must have vested in them the properties which were originally gifted to them by the deceased. There is no case that the properties which the partners derived as their own was ever brought into the stock of the firm or became the properties of the firm under s. 14 of the Partnership Act, 1932. It is useful to read s. 14 of the Partnership Act at this st ..... X X X X Extracts X X X X X X X X Extracts X X X X
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