CONTROLLER OF ESTATE DUTY Vs. PRAHLAD RAI

JUDGEMENT

(1.) The following question of law which was originally before a Division Bench of this Court has been referred to the Full Bench :-

(2.) The question arises out of the order of the Income-tax Appellate Tribunal in Estate Duty Appeal No. 72 of 1963-64. The facts lie in a narrow compass. The deceased was one Shri Kashmiri Lal who died on 21-10-1961 and the accountable person is his son Shri Prahlad Rai, who will hereafter be referred to as the assessee. On 17-3-1962 a return showing the net estate of the deceased which consisted of moveable assets and immovable properties was filed by the accountable person. It was claimed that the deceased gave gifts to his four minor grand-daughters (daughters of Shri Prahlad Rai) on 26-9-1954 of a sum of Rs. 6,250.00 each. He did so by making transfer entries in the books of account of the firm Messrs Sant Lal Kanhaya Lal in which the deceased was a partner holding a share of 28 nP out of 100 nP. On 12-3-1957 the deceased executed four memoranda on stamp papers confirming the gifts which were accepted by the mother of said grand-daughters. All the four memoranda form part of the statement of case and are identical in terms. One of the said documents is re-produced here-under :-

(3.) On the day on which the gifts were actually made by the deceased, the deceased had a capital of Rs. 1,29,006.00 standing to his credit in the balance sheet of the firm although according to the order made by the Assistant Controller of Estate Duty, the cash balance of the firm on that date was 2,520/6/6. The Assistant Controller of Estate Duty held that the fiifts were not valid as three was no sufficient cash available on the date of the gifts. He also held that the deceased was not entirely excluded from the benefit of the amount donated by him as the alleged gifted amounts remaind with the firmin which he was a partner. Section 10 of the Estate Duty Act, 1953 was therefore held applicable to the case and the amount in question was includible in the estate of the deceased for the purpose of levying estate duty.