CONTROLLER OF ESTATE DUTY Vs. SILESHKUMAR R MEHTA

JUDGEMENT

(1.) IN this reference under section 64(1) of the Estate Duty Act, 1953 (hereinafter referred to as "the Act"), the Tribunal has referred the following two question for our opinion at the instance of the Revenue :

(2.) THE first question pertains to the exclusion of Rs. 17,761 while computing the principal value of the half share of the deceased in the partnership firm, M/s. Manilal and Sons. THE said amount represented the credit balance in the charity account in the books of the partnership firm. THE Assistant Controller came to the conclusion that the credit balance was not a real liability and it should be added while evaluating the deceased's half share in the profits of the firm. On appeal, the Appellate Controller held that the partnership firm had full control over the amounts till such time they were disbursed or utilised for charitable purposes and hence the Assistant Controller was justified in including the same while evaluating the deceased's half share in the profits of the partnership firm, M/s. Manilal and Sons. Aggrieved, the accountable person filed an appeal before the Tribunal and contended that a property at Purasawalkam was sold on May 13, 1944, for Rs, 71,111 and the profit on the same property was credited to the charity account even during the lifetime of the father of the accountable person and the amount was being utilised for charitable purposes and the credit balance in the charity account cannot, therefore, be included, while evaluating the deceased's half share in the partnership firm, M/s. Manilal and Sons.

(3.) THE second question in this reference relates to the exclusion of Rs. 2,923 and Rs. 47,077 under sections 46(1)(b) and 46(2), respectively, of the Estate Duty Act. THE deceased had taken a loan of Rs. 60,500 from his son, Samirkumar R Metha. He had also gifted a sum of Rs. 50,000 on October 5, 1967, to his son. THE Assistant Controller came to the conclusion that the liability to Samirkumar R Metha at the time of death of the deceased amounting to Rs. 2,923 should be included in the estate of the deceased under section 46(1)(b). THE deceased also repaid a sum of Rs. 77,431 towards the amount borrowed from his son within two years of his death. THE Assistant Controller came to the conclusion that the repayments will be covered by section 46(2) and have to be assessed as property passing on the death of the deceased. THE amount assessable under section 46(1)(b) and 46(2) was, however, restricted to the sum gifted, viz., Rs. 50,000. On appeal, these conclusions of the Assistant Controller were confirmed by the Appellate Controller on the same reasoning as given by the Assistant Controller.