CONTROLLER OF ESTATE DUTY Vs. R ARVAMUDHAM

JUDGEMENT

(1.) AT the instance of the Revenue, the following question has been referred to us for opinion by the ITAT."Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the sum of Rs. 85, 000 being the amount gifted by the deceased to his sons, wife, daughter and grandsons was not liable to be included under s. 10 of the E.D. Act ?" *One Sri M. A. Ramanujam Pillai was running a rice mill in his individual capacity. In 1956-57, a sum of Rs. 85, 000 was gifted by way of transfer to the debit of capital account of the deceased and to the credit of the account of his sons, wife, daughter and grandsons.

(2.) THEREAFTER, the donees were taken in as partners and the credit balances in their favour were credited to their capital account. The said Ramanujam Pillai died on October 16, 1969. In the course of the assessment proceedings under the E.D. Act, the Asst. CED held that since the possession and enjoyment of the funds gifted had not been retained by the donees to the entire exclusion of the deceased or of any benefit to him, s. 10 should be applied. He, therefore, added the said sum of Rs. 85, 000 as forming part of the estate of the deceased.The accountable person appealed to the Appellate Controller, and he found that the gift was made on April 1, 1957, and on the same day, the proprietary concern was converted into a partnership by making the donees as partners along with the deceased. He also found that gift tax has been levied in respect of the gift relating to Rs. 85, 000. He therefore, did not agree with the Assistant Controller that s. 10 should apply. In this view, he deleted the sum of Rs. 85, 000 from the value of the estate of the deceased. The Revenue, aggrieved by the decision of the Appellate Controller, went before the Tribunal.