CONTROLLER OF ESTATE DUTY Vs. IMRANALI HASSANALI

JUDGEMENT

(1.) WHETHER , on the facts and in the circumstances of the case, the provisions of S. 10 of the ED Act, 1953, were applicable to (a) the sum of Rs. 88,789 gifted to the son and grandsons, (b) the house properties valued at Rs. 35,000 and gifted to the son and grandson, and (c) 11/16ths share of the goodwill in the firm ?

(2.) THE aforesaid question referred under S. 64(1) of the ED Act, 1953 (for short "the Act"), at the instance of the Revenue arises in the following factual backdrop. One, Shri Hassanali Mohammadali died on Dec. 21, 1960. Estate duty assessment arises consequent on his death. Deceased carried on business along with his son, Shri Imranali, in the name and style of M/s. Hassanali Mohammadali up to the year 1951. Up to and including the asst. yr. 1952 -53, this business was assessed in the status of an ED Act. On Oct. 30, 1951, a partnership deed was executed to which the deceased, his son, Imranali, and two of his grandsons, Shri Abdullabhai and Mohammadbhai, were parties. Share of the deceased was to the extent of five annas. On that day, which was a Diwali day, the deceased had a Credit balance of Rs. 1,29,147 in his capital account. He gifted a sum of Rs. 88,789 out of the same to his son and grandsons by debit to his capital account and credit to the respective accounts of the donees. These amounts remained in the books of the firm as capital contributed by the respective parties till the time of his death.

(3.) WE may at the very outset refer to the stand taken by the accountable person. According to him, the son and the grandsons of the deceased were actively helping him in the business and were working without any salary or remuneration. The deceased was a very old person and out of filial love and affection he gifted the properties and delivered possession. The deceased did not reserve any benefit for himself in the said gifted properties which the donees started enjoying to the entire exclusion of donor. The income accruing to his son and grandsons, who were partners in the business, were appropriated by them for their own use, and the deceased was entirely excluded from any use thereof. The whole of goodwill under the circumstances set out above could not belong to the deceased only. As regards immovable properties, it was contended that after the transfer, the properties were mutated in the respective names of the donees and even the taxes were paid by them. In the house property gifted to Imranali, partnership business was being carried on much before the gift. Partnership was not paying any consideration to the deceased and this arrangement or licence was continued as before by the donee even after the gift. The deceased occupied the residential house at the instance and with the grace of the donee. We may notice that the findings recorded by the Tribunal are in consonance with the stand taken by the accountable person. These established facts are thus the basis for examining the points of law