CONTROLLER OF ESTATE DUTY Vs. VEERAN WALI

JUDGEMENT

(1.) AT the instance of the Revenue, the following question has been referred for the opinion of this Court under S. 64(1) of the Estate Duty Act, 1953 (in short "the Act"), by the Income -tax Appellate Tribunal, Delhi Bench "D" (in short "the Tribunal") :

(2.) THE background facts necessary for disposal of the reference are as follows. Hari Ram (hereinafter referred to as "the deceased") died on 25th Feb., 1976, leaving behind his wife, Smt. Veeran Wali (hereinafter referred to as "the accountable person"). By order dt. 30th Dec., 1978, the Assistant Controller of Estate Duty (in short "the Assistant Controller"), assessed the principal value of the property that passed on the death of the deceased to the accountable person at Rs. 2,33,104. The said figure included Rs. 1,67,240 as being the value of the house situated at No. 42/75 Punjabi Bagh, Delhi. The site of the house was acquired by the accountable person as per conveyance deed dt. 23rd March, 1973, as member of a co -operative society and a building had been constructed thereon. The Assistant Controller held that the funds for investment in the purchase of plot as well as construction thereon were provided by the deceased who was to be taken as the real owner of the house. Accordingly, it was held that the house passed on the death of the deceased to the accountable person. The matter was carried in appeal before the Appellate Controller of Estate Duty (in short the "Appellate Controller"), who held that the value of the house was to be excluded from the computation of the principal value. According to him, the house did not pass on to the accountable person on the death of the deceased. He held that there was no material to hold that the legal title to the property in question in the name of the accountable person was sham or nominal. A Full Bench decision of the Allahabad High Court in O.S. Chawla vs. Asst. CED (1973) 90 ITR 68 (All), was found to be distinguishable on the facts and he relied on certain other decisions to support his conclusions. The matter was carried in appeal before the Tribunal by the Revenue, It was noticed by the Tribunal that though the funds were provided by the deceased and the income was being taxed in the hands of the deceased, that was really not material and it was a case where S. 6 of the Act was inapplicable. The decisions to which reference was made by the Appellate Controller were held to be applicable to the facts of the case. The said decisions are Smt. Shantabai Jadhav vs. CED (1964) 51 ITR (ED) 1 (AP), Smt. Denabai Boman Shah vs. CED (1967) 66 ITR 385 (AP), Aloke Mitra vs. CED (1971) 82 ITR 430 (All), CED vs. M.L. Manchanda (1974) 93 ITR 173 (P&H) and CED vs. T.N. Kochhar (1973) 89 ITR 216 (All). On being moved for a reference, the question as set out above has been referred for the opinion of this Court.

(3.) SECS . 5 and 6 of the Act have relevance so far as the case is concerned. They read as follows :