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TMI Blog1996 (10) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... ellate Tribunal, Hyderabad, for opinion of the High Court under section 64(1) of the Act. The following six questions were so referred : " 1. Whether, on the facts and in the circumstances of the case, the sum of Rs. 1,56,971, relating to the estate of late Mazharunnisa Begum is includible in the estate of the deceased as passing under section 5 of the Estate Duty Act, 1953 ? 2. Whether, on the facts and in the circumstances of the case, the sum of Rs. 8,23,697, representing the amount spent on the construction of quarters for dependants and Khanazadas, is includible in the estate of the deceased under section 9 of the Estate Duty Act ? 3. Whether, on the facts and in the circumstances of the case, the sums of Rs. 12,61,649 and Rs. 8,85, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time of final hearing of this appeal, learned counsel for the appellant fairly stated that question No. 5 is covered against the appellant by a decision of this court in the case of P. Leelavathamma v. CED [1991] 188 ITR 803 ; [1991] 2 SCC 299. Therefore, it will have to be answered against the appellant and in favour of the respondent. We shall now deal with the remaining questions which were pressed for our consideration : Question No. 1 : It has to be noted that the appellant-accountable person was called upon by the authorities under the Act to furnish an appropriate return disclosing the net value of the estate of the erstwhile Nizam of Hyderabad, Mir Osman Ali Khan, who died on February 24, 1967. The Assistant Controller compute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, was rightly includible in the estate of the late Nizam. The aforesaid finding of the High Court is well sustained on evidence on record and calls for no interference. Question No. 1 is, therefore, answered against the appellant and in favour of the respondent. That takes us to the consideration of question No. 2. Question No. 2 : This question pertains to the inclusion of a sum of Rs. 8,23,697. It was the amount spent on the construction of quarters for dependents and khanazadas of the late Nizam in the open land surrounding the King Kothi Palace. This property was gifted on March 21, 1957, by an instrument in writing registered in favour of the Nizam's grandson, Prince Mukarram Jah. Simultaneously with the gift, the late Nizam took on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the stand taken by the concerned accountable person in wealth-tax proceedings wherein it was submitted that the quarters after construction were handed over to the khanazadas and the Nizam had divested himself of the right over them and as such they were in the nature of gifts made by him to the khanazadas. Once the said stand was taken by the accountable person in wealth-tax proceedings obviously the cost of these constructions had to be taken as gifts made by the Nizam to the khanazadas and as the said disposition of property was within two years of his death, in the present estate duty proceedings there was no escape from the conclusion that these gifted amounts by fiction of section 9 of the Act were deemed to be property passing on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nizam as trust money on behalf of the concerned beneficiaries. These trust amounts lying deposited with the late Nizam could not form part and parcel of his estate. Consequently, there would remain no occasion to include these amounts in his estate. Only on this ground, therefore, these amounts were required to be excluded. There was jural relationship between the Nizam on the one hand and these beneficiaries on the other, who were the equitable owners of these amounts only as trustees and beneficiaries. No debtor-creditor relationship existed between them. Consequently, section 46 was out of the picture. In our view, the High Court, therefore, was not justified in treating these amounts as debts due from the Nizam to the concerned benefic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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