PANNABAI Vs. CONTROLLER OF ESTATE DUTY

JUDGEMENT

(1.) THIS is a reference made under Section 64(1) of the E.D. Act, 1933, by the Income-tax Appellate Tribunal, referring for our answer the following question of law :

(2.) THE reference relates to the estate of Balkishan Nathani, who died on 22nd March, 1961. Balkishan had two sons, Govindlal and Shankarlal. Shankarlal has two sons, Sunderlal and Laxmichand, and a daughter, Kusum. Govindlal has a son, Gangadas. Gangadas has a son, Rarnratan, and three daughters, Rambha, Usha and Kiran. THE deceased was a partner in the firm, M/s. Shaligram Laxmicband Nathani, doing money-lending business. THE other partners in the firm were his two sons, Govindlal and Shankarlal, and an outsider, Purshottamdas. From 3rd October, 1955, Govindlal ceased to be a partner in the firm and in his place his son, Gangadas became a partner.

(3.) THE narration in the journal of the firm stated that the amounts were debited to the capital account of the deceased at his instance and the corresponding amounts were credited in the names of the persons mentioned above, for the respective marriage expenses. No interest has been charged to these accounts. THE deceased addressed letters to Sunderlal, Shankarlal and Gangadas confirming these transfers and making it clear that the amounts were to be used for the marriage expenses of the transferees and the transferees were the owners of the amounts from the date on which the amounts were credited to their accounts in the books of the firm. THE transfers were accepted by Sunderlal for himself and by Shankarlal for his son, Laxmichand, and his daughter, Kusum, and by Gangadas for his son, Ramratan, and daughters, Rambha, Usha and Kiran. THE deceased also addressed a letter to the firm, making it clear that the amounts in question were to be paid to the parties at the time of their respective marriages. Letters were also addressed on behalf of the firm to Sunderlal, Shankarlal and Gangadas confirming the transfers and making it clear that the firm would be liable to pay the amounts only at the time of marriage and that till that time the amounts will remain as deposits in the respective names with the firm without interest. THE deceased addressed separate letters to Sunderlal, Shankarlal and Gangadas on 18th November, 1956, referring to the arrangements made by him with the firm about the transfer of the amounts and making it clear that the amount had been gifted to the transferees, that they were the sole owners of the amounts and that he had no claim over those amounts.