CONTROLLER OF ESTATE DUTY Vs. SUSHEELA MARIAPPAN

JUDGEMENT

(1.) ONE V. P. K. Kayarohanam Pillai, hereinafter called the deceased, who died on June 27, 1970, had made several gifts and settlements in favour of his daughter, his son-in-law and grandsons by the settlement deeds executed between May 2, 1953, and November, 1959, in respect of agricultural lands. The son-in-law was in service in the State Bank of India and was liable to be transferred from place to place. The property was managed by the deceased himself and the income from these lands was credited in his books to the account of the donees. All the expenditure in connection with the earning of such income was also debited to the same account. The Assistant Controller in the proceedings for assessment to estate duty took the view that the entire income of the gifted property had come into the possession of the deceased and was used by him for his business notwithstanding the fact that separate accounts of the donees have been maintained in the books in respect of such amounts. He, therefore, took the view that the donees could not be said to have assumed possession and enjoyment of the gifted property to the entire exclusion of the deceased and the deceased could not be said to have been entirely excluded from the possession and enjoyment of the property. He, therefore, included the value of the settled properties in the value of the estate of the deceased. By way of abundant caution, it appears that the Assistant Controller also invoked the provision of section 46 of the Estate Duty Act. The accountable person had claimed a deduction of Rs. 13,634 due to the son-in-law and Rs. 40,511 due to the daughter out of the monies credited to their accounts by the deceased. The Assistant Controller held that these amounts were liable to abatement under section 46(1)(b) of the Estate Duty Act and he held that a sum of Rs. 90,338 could be covered under section 46(1)(b) and section 46(2) of the Estate Duty Act.

(2.) THE accountable person took the matter in appeal to the Appellate Controller of Estate Duty. THE Appellate Controller took the view that the possession of the deceased was not attributable to any reservations in the deeds of settlement and was not referable to the gift. He found that the son-in-law had to be at different places and the assessee had looked after the lands only on behalf of the donees and the deceased did not obtain any benefit out of the gift as a matter of right and he acted only as an agent. He also took the view that section 46 of the Estate Duty Act was not applicable.

(3.) THE Revenue to pay the costs of this reference. Counsel's fee Rs. 500.