CONTROLLER OF ESTATE DUTY Vs. SMT. 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 :

(2.) One Govindaraja Mudaliar, who died on 4th Jan., 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. Dhanral 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 Mudahar. 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.

(3.) It is this order that is the subject -matter of the present case. Mr. C.V. Rajan, learned standing counsel appearing for the Revenue, brought to the notice of this Court the finding of the Tribunal. The gifts were made by making entries in the assessee's personal books of account and the amounts gifted were retained by the deceased in his individual money lending business. This Court in the case of E.M v/s. Muthappa Chettiar vs. CIT : [1945] 13 ITR 311(Mad) has held that mere book entries would not be sufficient to constitute a valid gift, particularly when the gifts or funds we found to be used in the donor's business. The finding of the Tribunal is that only by book entries, the alleged gifts were made and it is also from the finding that the funds continued to be used by the deceased in his business. If that is so, on the basis of the decision of this Court as in Muthappa Chettiar's case cited supra, the gifts made by the deceased were not valid in law and the logical consequence is that the money continued to be the property of the deceased which passed on his death. Hence, there is no question of either applicability of s. 9 or s. 46 of the E -D Act to the facts of the case.