MUMTAZ AHMED KHAN Vs. CONTROLLER OF ESTATE DUTY

JUDGEMENT

(1.) THE Central Board of Direct Taxes has referred the following question for our opinion, viz.:

(2.) THE facts, as narrated in the statement of the case, are that the applicant who was a son of the deceased, late Inayatur Rahaman Khan, who died on June 25, 1958, submitted a statement of account before the Assistant Controller of Estate Duty, declaring the principal value of the estate of the deceased at Rs. 38,637. THE Assistant Controller determined the principal value of the estate at Rs. 1,49,937. THE principal value so determined included a sum of Rs. 45,000 being the value of six house properties at Secunderabad. It was claimed before the Assistant Controller that the deceased had transferred these house properties to his sons and daughters by oral gift known as hiba under Mohommadan law, more than two years before the death of the deceased and as such the properties should not be included in the estate passing on the death of the deceased. THE Assistant Controller held that there was no delivery of possession of the properties gifted so as to make the gifts valid as kiba. It was also stated that there were no accounts to show how the rents realised from the house properties were actually utilised. THE Assistant Controller -further held that, even assuming that all these properties were validly gifted by the deceased, the properties should be deemed to pass on the death of the deceased under the provisions of Section 10 of the Estate Duty Act, 1953 (hereinafter called " the Act"), since the deceased could not be said to have been entirely excluded from the benefits from the properties gifted by him. He accordingly included these properties in the estate of the deceased. On appeal, the Central Board of Direct Taxes, while holding that the gift was valid as it had been completed two years prior to the death of the deceased, and as such the properties gifted were outside the scope of Section 9, came to the conclusion that the donees did not enjoy the properties to the entire exclusion of the deceased, and that, therefore, the provisions of Section 10 of the Act applied to these properties. THE applicant, being aggrieved by this decision, required the Board to refer the aforesaid question to this court for its opinion.

(3.) IN the result, our answer to the question is in the affirmative and against the assessee with costs. Advocate's fee, Rs. 250.