CONTROLLER OF ESTATE DUTY Vs. THANWAR DASS

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Allahabad, has submitted this reference under Section 64(1) of the Estate Duty Act, 1953 (hereinafter referred to as " the Act "), for the opinion of this court on the following question of law :

(2.) WHEN this reference came up before a Division Bench of this court, it noticed that there was a conflict between the decisions of two Division Benches of this court in Behari Lal Matanhelia v. Controller of Estate Duty, 1972 86 ITR 346. and Controller of Estate Duty v. Ramesh Chand Gupta, 1973 92 ITR 307 All.. The case was accordingly referred to a Full Bench and that is how it has now come up before us.

(3.) THE deceased person in the instant case is one Smt. Sita Bai. She was a partner in a firm of the name and style of M/s. Nekumal Pawan Dass, She had a four anna share in the firm. On different dates she made gifts of the aggregate value of Rs. 40,000 to her daughter-in-law, Smt. Hira Bai. THE gifts were made by transfer entries in the books of accounts of the firm by debiting the amounts to her account and crediting them to the account of the donee Smt. Hira Bai. THE Assistant Controller of Estate Duty found that out of the aggregate sum of Rs. 40,000, a sum of Rs. 5,000 was gifted within one year of the donor's death and hence it was liable to be ignored in the computation of the value of the estate of the deceased, as provided in Section 9 of the Act. As regards the balance of Rs. 35,000, he found that the same was not withdrawn by the donee immediately after the gifts were made. It was, however, withdrawn after a lapse of some time on different occasions between November, 1962, to February, 1963. From a copy of her accounts, which has been annexed to the statement of the case as annexure "C", it appears that in the year 1962-63, she transferred in her account with the firm a sura of Rs. 33,680'78 from another concern called N. P. Oil Industries and deposited a sum of Rs. 5,000 in cash. Thus, a sum of Rs. 35,000 which she had withdrawn earlier was once again brought back in the partnership firm as deposits in her name. Those deposits remained with the firm until the donor's death. THE firm, however, continued to pay interest to the donee on these deposits. On these facts the Assistant Controller of Estate Duty held that Section 10 was applicable and the sum of Rs. 35,000 was liable to be included in the estate of the deceased liable to estate duty for the following reasons: