COLLECTOR OF ESTATE DUTY Vs. ROSHAN JAHANGIR GANDHI

JUDGEMENT

(1.) This appeal by certificate by the Controller of Estate Duty directed against the order dated 17/08/1978 of the High court of Patna in C. W. J. C. No. 202 of 1976, raises a short and interesting question as to the scope and interpretation of Section 50-B of the Estate Duty Act, 1953 ('act' for short).

(2.) The estate to which the proceedings for assessment of duty relate, was of the late Sir J. J. Gandhi who died on 17/04/1972. Mrs Roshan Jahangir gandhi was the accountable person. A sum of Rs. 3,16,026 was determined as the provisional duty. The accountable person having had no immediate cash to meet the demand for provisional duty, borrowed on 27/12/1972, sums aggregating to Rs. 3,36,000. 00 out of which the provisional duty of Rs. 3,16,026. 00 was paid on 23/03/1973. On 10/04/1974 she sold certain shares forming part of the estate to discharge the said borrowings. Indeed, the sale was made to the lender from whom the major borrowing had been made. Upon the sale of the shares she became liable to pay capital gains in the sum of Rs. 90,158. 00 which she duly paid. Basing on the provisions of Section 50-B of the Act, she claimed to be entitled to a rebate respecting this payment of capital gains. Section 50-B of the Act reads:

(3.) This claim for the refund based on this provision was refused by the revenue. The Revenue, upon a strict and literal construction of Section 50-B, took the view that the payment of duty was, quite obviously, not directly out of the proceeds of the transfer of the shares as, indeed, the payment of duty was anterior to the transfer and that, therefore, the requirements of Section 50-B of the Act were not satisfied.