JOHN J CHACKOLA Vs. CONTROLLER OF ESTATE DUTY

JUDGEMENT

(1.) IN this reference application under Section 64(1) of the Estate Duty Act, 1953, the INcome-tax Appellate Tribunal, Cochin Bench, Ernakulam, at the instance of the accountable person, has referred the following three questions of law for decision by this court :

(2.) THE brief facts necessary for adjudication of the questions referred are as follows : THE properties which devolved on the accountable person included certain shares in a company, namely, Chackolas Spinning and Weaving Mills. THE said shares were not quoted in the market. THE valuation of these unquoted shares is the subject-matter of this reference. THE Assistant Controller of Estate Duty originally valued the shares held by the deceased in Chackolas Spinning and Weaving Mills by adopting the method provided under Rule 1D of the Wealth-tax Rules, 1957. While doing so, he treated the provision made by the company for gratuity as a liability. He valued the shares at the rate of Rs. 43.65 per share and the value of the shares was determined accordingly.

(3.) AGGRIEVED by the said order, the Department took up the matter in appeal before the Income-tax Appellate Tribunal, Cochin Bench. Before the Income-tax Appellate Tribunal, the Department contended that the view taken by the Appellate Controller is erroneous and that the Appellate Controller has totally disregarded the decision of the Kerala High Court in the case of CWT v. K. Gopinathan Nair [1976] 103 ITR 23. This decision according to the Department, supports the view taken by the Assistant Controller in his order under Section 61 of the Estate Duty Act and that the Appellate Controller in fact took into consideration decisions which have no direct bearing while giving the impugned relief. The Income-tax Appellate Tribunal also considered the contentions of the accountable person that the decision of the Appellate Controller is supported by the decision of the Supreme Court in the case of Vazir Sultan [1981] 132 ITR 559 and CWT v. S. Ram [1984] 147 ITR 278 (Mad). Thereafter, the Appellate Tribunal observed that the Kerala High Court in the decision reported in CWT v. K. Gopinathan Nair [1976] 103 ITR 23 has clearly held that the provision for gratuity is a contingent liability and that the Tribunal in E. D. A. No. 15/(Coch) of 1985 dated August 29, 1989, had taken a similar view after considering the decision of the Supreme Court in the case of Vazir Sultan [1981] 132 ITR 559 and also the decision of the Madras High Court in CWT v. S. Ram [1984] 147 ITR 278 and since the order originally passed by the Assistant Controller of Estate Duty was without taking into consideration the decision of the jurisdictional High Court, there is a clear mistake apparent from the records. Accordingly, the order of the Assistant Controller of Estate Duty passed under Section 61 of the Act was restored. It is against this order of the Income-tax Appellate Tribunal, Cochin Bench, that the accountable person has come up in reference.