CONTROLLER OF ESTATE DUTY Vs. G DHANAMANI

JUDGEMENT

(1.) AT the instance of the CED, Madras, the Tribunal has forwarded the statement of the case and referred the following question of law under s. 64(1) of the ST Act, 1953 "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the two gifts of Rs. 5, 000 each made by the deceased to his grand children by making books entries in the books maintained for his personal business, would not at all constitute a valid gift and hence neither the inclusion of the gifts under s. 9 of the ED Act nor the abatement of the debts under s. 46(1) is sustainable ?" *

(2.) ONE Govindaraja Mudaliar, who died on 4th January, 1976 made two gifts of Rs. 5, 000 to his grandchildren, i.e., Rs. 5, 000 to P. Gajalakshmi and Rs. 5, 000 to S. Dhanraj by making book entries in the books maintained for his personal business. The Addl. CED held that the gifts have been made within two years prior to his death and hence, under s. 9 of the ED Act, the amounts received were includible in the ED of the Deceased. He also invoked the provisions of s. 46 of the ED Act and made further addition of Rs. 10, 000 to the value of the said amount that passed on the death of Govindaraja Mudaliar. The ACED on appeal, deleted the additional amount on the ground that there could not be two additions, one under s. 9 and another under s. 46 of the Act, and, therefore, held that only one addition was possible. The Department filed an appeal before the Tribunal on the ground that both the additions under s. 9 as well as s. 46 are possible, if the statutory conditions for invoking the provisions of s. 9 as well as s. 46 are satisfied. The Tribunal, however, found that the deceased made the gift by making entries in his own personal books and there was no gift in the eye of law. According to the Tribunal, when there was a gift by mere book entries, the gift was not effective or valid in law. The Tribunal, therefore, held that the amounts are includible in the value of the estate that passed on the death of the deceased under s. 5 of the ED Act. It further held that since s. 9 was held to be not applicable, s. 46 of the ED Act also will not apply