CONTROLLER OF ESTATE DUTY Vs. VENKATARAMAN B S

JUDGEMENT

(1.) PURSUANT to a direction of this Court under s. 64(3) of the ED Act, the following question has been referred by the Tribunal :

(2.) THE reference arises as a result of the assessment to estate duty on the death f one V. S. Balasubbaraya Chettiar on 29th Sept., 1968. He was a partner in a firm known as M/s V. S. Balasubbaraya Chettiar and Sons. He made gifts of certain amounts specified in the statement of the case to his daughter and grandchildren. The amounts as such are not really very material and, therefore, there is no need to refer to them. These gifts were effected by transferring the amounts from the current account in the books of the firm and crediting the said amounts in the accounts of the donees opened in the books of the partnership firm. The Asstt. CED considered the question of inclusion of the relevant amounts in the estate duty assessment in the context of s. 10 of the ED Act. He came to the conclusion that there was no valid gift and that even if there was any valid gift, the gifted amount continued to remain in the firm in which the deceased was a partner till the date of his death, and that since the deceased was not thus entirely excluded from the subject- matter of the gift, the gifted amount should be deemed to pass on the death of the deceased under s. 10 of the Act. The Appellate CED confirmed the assessment. On further appeal, the Tribunal, following the decisions of the Supreme Court in CED vs. C. R. Ramachandra Gounder (1973) 88 ITR 448 (SC) and CED vs. N. R. Ramarathnan (1973) 91 ITR 1 (SC), held that the relevant amount could not be included in the principal amount of the estate of the deceased, and that the benefit to the donor was not a benefit referable to the gift and that it was, in fact, totally unconnected with the gifts made by the donor. It is this order of the Tribunal that has given rise to the question extracted already.

(3.) AT p. 465, after referring to some of the decisions of the High Courts of which two are from this Court, the Supreme Court points out :