CONTROLLER OF ESTATE DUTY Vs. RAMARATHANAM N R

JUDGEMENT

(1.) ONE Mr. N.S. Ramaswami Iyer died on October 17, 1960. He was a landlord owning agricultural lands, house properties and also investments. He was instrumental in starting a partnership styled as Ennessor and Company, at Coimbatore in 1947. Besides himself, the other partners were his three sons and daughter. The firm was engaged in money-lending business and was registered under Section 26A of the Income-tax Act, 1922. On March 31, 1953, and April 1, 1956, the deceased transferred, by book adjustments in the account of the firm, Rs. 52,042-7-3 and Rs. 77,881-11-8, respectively, to his sons and daughter. In the return for purposes of estate duty, the accountable persons excluded from the principal value of the estate the total of the two sums, namely, Rs. 1,29,924. The revenue disagreed with the accountable persons and included the same as dutiable, but the Tribunal was not prepared to accept that view. In doing so, the Tribunal felt supported by Munro v. Commissioner of Stamp Duties, [1934] A.C. 61 ; 2 E.D.C. 462. At the instance of the Commissioner of Income-tax who is the Controller of Estate Duty, the following question has been referred to this court:

(2.) THE revenue's point of view was that there were no cash gifts of the two sums but they were brought about by mere adjustments in the books without physical handing over of the cash and further by being a partner in the firm, the deceased was not entirely excluded from the subject-matter and beneficial enjoyment of the gifts. THE Assistant Controller noticed that this was not a case of the deceased parting with cash and thereafter the donees re-introducing such cash in the business at a later stage, but nevertheless he thought that this made no difference and he would add that the deceased had also beneficial enjoyment of the gifted properties. Confronted with Munro v. Commissioner of Stamp Duties and Clifford John Chick v. Commissioner of Stamp Duties, 1958 A.C. 435 ; [1959] 37 I.T.R. (E.D.) 89 ; 3 E.D.C. 915 the Tribunal found that Munro v. Commissioner of Stamp Duties was nearer to this case.

(3.) MUNRO v. Commissioner of Stamp Duties was cited before the Board but Viscount Simonds stated as to that :