JEANIE D KARAKA Vs. CONTROLLER OF ESTATE DUTY

JUDGEMENT

(1.) THE Income -tax Appellate Tribunal has referred the following two question for our opinion under s. 64 of the E.D. Act, 1953 (hereinafter referred to as 'the Act' :

(2.) OUT of the these two questions, question No. 1 referred to us at the instance of the accountable person is covered by a decision of these court is Smt. Shantaben Narottamdas v. CED and Mancklal Premchand Shah v. CED [1978] 11 ITR 365. Following the said decision, we answer this question in the negative and against the accountable person.

(3.) THE first contention, which is raised on behalf of the revenue, is that in order to attract the application of s. 46(1)(b) of the E.D. Act there need not be any direct nexus between the gifts made by the deceased to Mrs. Karaka and the subsequent loan given by Mrs. Karaka to the deceased. It was urged that the admitted facts clearly established that the consideration for the debt was given by a person (Mrs. Karaka) amongst whose resources there was at some point of time included the property (gifted amount of Rs. 32,100) derived from the deceased. Consequently, it was submitted, the provisions of s. 46(1)(b) were attracted. On the other band, Mr. K. C. Patel for the applicant, submitted that in order to attract and application of either clause (a) or clause (b) of s. 46(1), a direct nexus between the property gifted to Mrs. Karaka and the loan advanced by her to the deceased must be established. Mr. Patel pointed out that the evidence on record proved beyond doubt that Mrs. Karaka to whom the deceased had made gifts totaling Rs. 32,100 had utilised the entire amount of the two cash gifts in purchasing shares. Therefore, submitted Mr. Patel, the amounts which were gifted to here were not available to Mrs. Karaka when she advanced a loan of Rs. 20,000 to here father, the deceased. According to Mr. Patel, the advance of loan cannot be linked with the gifts made by the deceased to Mrs. Karaka and, therefore, the debt of Rs. 19,000 which has remained unpaid cannot be held to have abated under s. 46 of the E.D. Act. In support of his contention, Mr. Patel has relied on the decision of this court in Rasiklal Lallubhai Shah v. CED : [1980]124ITR212(Guj) .