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TMI Blog1981 (4) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... sst. Controller, Allahabad, by his order dated November 30,1970. When the appeal filed against the said order was still pending, the respondent made an application under s. 52(1) of the Act on February 16, 197l, to the CBDT offering one of the items of property passing on the death of the deceased, namely, premises No. 1, Phaphamau Road, Allahabad, whose principal value had been determined by the Asst. Controller at Rs. 2,53,625, in part payment of the: balance of estate duty which was still payable by him under the order of assessment. The said application elicited a cryptic reply dated September 16, 1971, from the Under Secretary of the CBDT, the relevant part of which read as follows: " I am directed, to refer to your petition dated 16-2-1971 on the subject mentioned above and to say that your offer is not acceptable. " The Asst. Controller, however, wrote to the respondent on October 21,1971, stating that the respondent could pay the arrears of estate duty payable by him in month instalments of Rs. 10,000 each beginning from October 29, 1971, subject to payment of interest at 9% per annum on the arrears outstanding. Thereupon, the respondent filed a writ petition before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 5(1) of the Act provides that in the case of every person dying after the commencement of the Act there shall, save as expressly provided in the Act, be levied and paid upon the principal value ascertained as per the relevant provisions of the Act of all property, settled or not settled, including agricultural and situate in the territories which immediately before November 1, 1956, were comprised in the States in the First Schedule to the Act., 'which 'passes on the death of such person, a duty called " estate duty" at the rates fixed in accordance with s. 35 of the Act. The rates of estate duty are set out in the Second Schedule to 'the' Act. The principal value of the property liable for estate duty has to be ascertained in accordance with the provisions in Part V of the Act. The estate duty levied under the Act can be collected as per provisions in Part VII of the Act. Section 51 of the Act states that estate duty maybe collected by such means and in such manner as the CBDT may prescribe. Rule 18 of the Estate Duty Rules (hereinafter referred to as " the Rules ") made by the CBDT, in exercise of the powers conferred by subs. (1) of s. 85 of the Act, deals with payment of est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely to do so. The property accepted need not itself be liable to duty. It may be accepted in satisfaction of duty on any property, real or personal. No Stamp Duty is to be payable on the transfer of such property (Finance (1909-10) Act, 1910, s. 56(2) ). The disposition of any property accepted by the Commissioners is provided for by ss. 50 and 51 of the Finance Act, 1946, under which the Treasury may direct that the land be transferred direct to a body of persons (e.g. the National Trust) or to trustees for such a body, etc., instead of to the Commissioners, and the duty receivable by the latter may be paid out of the National Land Fund established by s. 48 of the Act. It is within the discretion of the Commissioners whether they will accept property under this provision, but the Chancellor of the Exchequer in his Budget statement for 1946 said that he expected the power (which hitherto had not in practice been used) to operate on a substantial scale in the future : it is understood that seventy properties had been taken over up to the 31st March, 1963. He referred also to the National Trust and the Youth Hostels Association as examples of the bodies not established for profit, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) the Central Government shall, where necessary, intimate the registering authority concerned accordingly; and the authority shall administer the property in such manner as the Central Government may direct. (3) Where the price referred to in sub-section (1) exceeds the aggregate of the amounts due under this Act, in respect of the estate of the deceased, the excess shall be applied in the following order to the payment of any tax, penalty, interest or other amount (i) which the legal representative of the deceased is liable to pay in respect of the income, expenditure or wealth of, or gift made by, the deceased under any of the Acts referred to in clause (c) of section 2 of the Central Boards of Revenue Act, 1963 (54 of 1963); (ii) which the executor is liable to pay under any of the Acts aforesaid in respect of the estate of the deceased for the period of the administration of the estate; (iii) which the person beneficially entitled to the property in question is liable to pay under any of those Acts; and the balance, if any, shall be paid to the accountable person. In the Notes on Clauses annexed to the Bill which ultimately became the Direct Taxes (Amendment) Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent without any further formality. Sub-section (3) of s. 52 of the Act provides that where the price agreed upon exceeds the amount due as estate duty, the excess amount shall be applied to the payment of any tax, penalty, interest or other amount payable in the order mentioned in cls. (i) to (iii) thereof. If after adjusting all such dues, any balance still remains, such balance shall be paid to the accountable person. The Act is a fiscal statute principally intended to levy and collect estate duty which when collected has to be disbursed in accordance with Part XII of the Constitution. It is not a law providing for acquisition of a property forming part of the estate of the deceased. Part VII of the Act in which ss. 51 and 52 occur only provides the machinery for collection of the duty. Whereas s. 51 of the Act authorises the Board to prescribe the means and manner in which the estate duty may be collected, s. 52 gives the option to the accountable person to offer a property passing on the death of the deceased so that its price may be adjusted towards the payment of the estate duty. Rule 18 of the Rules made by the Board pursuant to s. 51 enables the accountable person to disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Central Govt. will be obliged to acquire properties in several parts of India where it may not find any use for them and spend money on their management and upkeep and arrange for their disposal. The cost of administration involved in the Act in that case possibly may be much more than the duty realisable under the Act. Further, if such is the construction to be placed then what happens if the price of the property offered is more than the duty payable? Then in every such case, the Government would be compelled to acquire property by paying to the accountable person the amount which is in excess of the duty and other sums payable under s. 52(2)(i) to (iii) even when it does not need such property. Surely, such could not have been the intention of Parliament. We are of the view that on a plain construction of s. 52 of the Act, the Central Govt. may at its discretion either accept the property offered under s. 52 or may not if the circumstances so warrant. The accountable person cannot claim that the Central Govt. is bound to accept such property. The power of the Central Govt. under s. 52 is purely administrative and discretionary. The High Court was in error in holding that if an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in that regard the law takes no account of the reason of any party for not choosing to entertain the proposal for sale made by the other, however arbitrary, illogical or irrelevant the reason may be. (2) The second stage follows the entertaining of the proposal and the actual negotiations between the parties which may, or may not fructify in a contract. Section 52(1) now under consideration is concerned with the first stage, and differs in this from the complete freedom to entertain the proposal in that the proposal made under s. 52(1) by the accountable person must be considered by the Central Govt. and any decision taken by it on that question must proceed on considerations which are relevant and bona fide. The price of the property is, however, left to be determined by agreement in the event of the Government deciding to accept the offer made by the accountable person. This forms part of the second stage. In the instant case, the High Court was, however, right in holding that it had not been shown that the competent authority had properly exercised its discretion. In the counter-affidavit filed by the Asst. Controller, some reasons were given in support of the decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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