CONTROLLER OF ESTATE DUTY Vs. K GOVINDARAJULU

JUDGEMENT

(1.) ON the demise of one, K. Kunchithapatham, on October 5, 1974, who, it is alleged, had gifted a little over 24 acres of wet land in a village in Karaikkal, a quarter of the Union Territory of Pondicherry, the Controller of Estate Dutyhas sought for a reference under section 64(1) of the Estate Duty Act, 1953 (hereinafter referred to as "the Act"), and, accordingly, the Tribunal at Madras has referred to this court the following questions "(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal, while agreeing with the view that section 10 of the Estate Duty Act would be applicable to this case, was justified in concluding that section 33(1)(o) would apply in respect of the gift included under section 10 of the Estate Duty Act ?(2) Whether the Appellate Tribunal was justified in applying the provisions of section 33(1)(o) of the Estate Duty Act in respect of the gifts made by the deceased on April 4, 1963, prior to the insertion of clause (o) to section 33(1) of the Estate Duty Act with effect from April 1, 1965, by the Finance Act, 1965, the deceased having died on October 5, 1974 ?"

(2.) THE gift, it is alleged, was made on April 4, 1963, by Kunchithapatham to his son, Govindarajulu. Kunchithapatham died on October 5, 1974. THE Assistant Controller, who assessed the duty, held that Kunchithapatham continued to be in possession and enjoyment of the land gifted and thus the property passed on his death under the said gift. He, accordingly, invoked section 10 of the Act and brought to tax the value of the said property. Before the Appellate Controller, there was some dispute about the extent of the land covered by the gift, but the main contention was that in case section 10 of the Act was attracted, since it was a gift by the father to his son, section 33(1)(o) of the Act was applicable. THE Appellate Controller found that even though there was a formal transfer of the land as early as April, 1963, Kunchithapatham continued to be in possession and enjoyment of the property right up to the date of his death and thus section 10 of the Act was attracted. THE Appellate Controller held, however, that the gift was one made beyond a period of five years as contemplated under section 33(1)(o) of the Act and thus not chargeable to duty. THE Revenue preferred an appeal before the Tribunal. It contended before the Tribunal that section 10 is an overriding provision and there was no scope for applying section 33(1)(o) in a case to which section 10 was attracted.

(3.) THE assessees contend that the date of the gift is immaterial and as long as the transfer is chargeable to gift-tax or is exempt under section 5--whatever may be the year in which the gift was made--the exemption from gift-tax must commence 'for any assessment year commencing after 31st day of March, 1964'."THE Supreme Court, upon that, has said" Having regard to the purpose for which the proviso was enacted and to the expression 'is chargeable' in conjunction with the provisions of the Gift-tax Act, 1958, the expression 'for any assessment year commencing after the 31st day of March, 1964, ' occurring in the proviso indicates that the transfer of assets must be chargeable to gift-tax under the provisions of the Gift-tax Act for any assessment year commencing after the 31st day of March, 1964, or, where the transfer is not chargeable under section 5 of that Act, then for any assessment year commencing after the 31st day of March, 1964, the proviso would apply.