CONTROLLER OF ESTATE DUTY Vs. KAMALA PANDALAI MRS

JUDGEMENT

(1.) LT. Col. K. G. Pandalai, a famous surgeon of his time, died on 5th February, 1960, leaving behind him only his wife, Kamala Pandalai, who is the accountable person for the estate duty proceedings that commenced on his death. By an indenture dated 18th of June, 1940, he gifted the three house properties named Vijaya, Vasantha and Ashoka together with a vacant site in Teynampet to his wife. In 1941, he constructed a house named Vanaja on the vacant site. From 1941 onwards Mrs. Kamala Pandalai was collecting the rents from these houses and leasing them as and when they fell vacant. In 1958, one of the buildings was leased out by her to the American Consulate with the lease deed in her name. Similarly, another building was leased out to Lloyds Bank, where also the lease deed was in her name.

(2.) THE deceased had acquired shares of the value of Rs. 3,520 in Bala-madies Plantations Ltd., in the name of his wife, as early as 1943. THE source for the investment had been provided by him.

(3.) THE Assistant Controller of Estate Duty came to consider the applicability of Section 10 of the Estate Duty Act on the above facts in respect of the properties in Teynampet and the shares in Balamadies Plantations Limited. He held that the deceased's account with the Lloyds Bank showed that right up to the date of his death, the rents from all the houses had been credited in this bank account. According to him, this was a case where the donee had not enjoyed the properties gifted to her by the deceased to the entire exclusion of any benefit to the donor. It was claimed before him that the association of Lt. Col. Pandalai in the bank account was only out of sentiment and that the withdrawals were only at the instance of and for the benefit of Mrs. Pandalai. THE Assistant Controller pointed out that the withdrawals showed that they were for payment of taxes, household expenses, etc. Inasmuch as the rents from the properties gifted by the deceased had been credited to the bank account, which was in the name of the deceased and operated by him up to a period within two years of his death, the value of the properties gifted was held to be includi-ble under Section 10. THE conversion of this account into a joint account would not, in any manner, it was held, prevent the application of Section 10. He added a sum of Rs. 3,77,000 with reference to the house properties and Rs. 3,250 with reference to the shares in the assessment.