CONTROLLER OF ESTATE DUTY Vs. ASWATHANARAYANA SETTY S

JUDGEMENT

(1.) THE deceased, Sri Sivanagere Subbiah, was partner in the firm of Messrs. S. Subbiah and Raja Ramakrishnaiah, Sira, under a partnership agreement dated November 28, 1947. THE deceased had a half share in the said business. THE capital standing to the credit of the deceased in the books of the firm as on June 30, 1954, was Rs. 1,07,148. On June 30, 1954, this amount was divided into three parts of four annas, two annas and two annas, respectively, and the two shares of two annas each in the capital were transferred to the accounts of the two sons of the deceased, viz., S. Aswathanarayana Setty and S. Venkateshiah. THE shares so transferred to the accounts of the sons amounted to Rs. 28,796 each. With sons and Raja Ramakrishnaiah and his son, Raja Sanjiviah, the profit-sharing ratio being four annas for the deceased, two annas each for his two sons, and four annas each for Ramakrishnaiah and his son. A fresh partnership deed was duly drawn on this basis and this re-constituted firm continued to exist till the death of the deceased on November 16, 1957. A copy of the partnership deed dated July 1, 1954. together with a free English translation of the same is appendix "A" and forms part of statement.

(2.) IN the estate duty proceedings that followed upon the death of the deceased, the accountable persons contended that the capital of Rs. 57, 594 transferred by the deceased to the sons on June 30, 1954, was an absolute transfer and the deceased did not get any interest whatever in the capital transferred or in the profits. The Assistant Controller of Estate Duty, however, did not accept this contention and held that the amount transferred by the deceased to his sons came under the purview of gifts and that the gifts so taken by the sons were not retained by them to the entire exclusion of the deceased and that, therefore, this amount must be deemed to be the property that passed on the death of the deceased as per the provisions of section 10 of the Estate Duty Act. The order of the Assistant Controller is a appendix "B" and forms part of the statement.

(3.) THIS order of the Tribunal was subsequently rectified by substituting the figure of Rs. 73,695 for the figure Rs. 57,594. The order of the Tribunal in the Misc. Application in E. D. A. No. 77 of 1962-63 dated November 4, 1964, is appendix "E" and forms part of the statement.