CONTROLLER OF ESTATE DUTY MADRAS Vs. S KUPPUSWAMI

JUDGEMENT

(1.) THIS is reference under s. 64(1) of the E.D. Act. The following two questions have been referred to us

(2.) AS the two questions refer to two distinct matters, we shall deal with each one of them separately. The estate duty assessment came to be made on the death of one K. Subramania Iyer, on 17th November, 1969. He was a partner in the firm of T. Purushotham & Co., with 22% share till 8th November, 1969, when he retired from the partnership. On the 9th November, 1969, his two major sons were admitted as partners and his minor son was admitted to the benefits of the partnership, each one of them having a 7 1/3 per cent. share in the firm with the consequence that the 22% share held by him till then came to be held by the two major sons and the minor son after his retirement. The ASst. CED came to the conclusion that there was a transfer by the deceased of interest in the partnership firm in favour of his sons and that it was gift under s. 9 of the E.D Act (hereinafter referred to as the Act) . The net assets of the firm were valued and 22% share representing the interest of the deceased was included in the dutiable estate as the deceased died within a very short period after he retired and the two major sons and the minor joined the partnership. The amount so included came to Rs. 47, 739The accountable person appealed to the Appellate Controller who confirmed the assessment by applying s. 9 of the Act to the aforesaid facts. On further appeal, the Appellate Tribunal deleted the sum of Rs. 47, 739 holding "that s. 9 of the Act did not apply. It is on those facts that the first question has been referred to this court

(3.) AND whereas the said K. Subramania Iyer due to old age and ailment expressed his intention to retire from the partnership-in favour of his sons with effect from today for which the other parties agreed." *