RUPCHAND MULLICK Vs. CONTROLLER OF ESTATE DUTY

JUDGEMENT

(1.) Kumar Kartick Churan Mullick died at Calcutta on 17th November, 1955. By his last will and testament the deceased had appointed the accountable persons, being two of his sons, as the executors and also trustees in respect of certain trusts created by the said will which was proved, and probate whereof was granted to the said accountable persons by the Hon'ble High Court at Calcutta on or about 20th March, 1958, in probate proceedings No. 242 of 1957. In the premises the accountable persons filed return under the E.D. Act, 1953, in (Form) E.D.-1 on 8th October, 1956, and subsequent rectifications made therein from time to time by the accountable persons. The Dy. Controller of Estate Duty, Eastern Zone, Calcutta, made an assessment on the 22nd July, 1958, under the E.D. Act, 1953, determining the principal value of the estate of the deceased at Rs. 24,85,971 and the duty payable thereon was fixed at Rs. 5,47,041.31. It appears from the said estate duty assessment order that one of the items shown was the face value of 500 shares worth Rs. 50,000 of Raja D.N. Mullick & Sons (P.) Ltd. These shares were shown in the return at Rs. 1,42,160. The Dy. Controller by his order of assessment valued the same at Rs. 3,64,140. Another item shown was the shares of the face value of Rs. 2,19,500. This item was shown as of nil value. The Dy. Controller accepted this position and did not alter the valuation in respect of the same. Another item which was entered in the computation was the debt due from K.C. Mullick & Sons Ltd. The value shown in the return was nil but in the assessment order the valuation had been determined at Rs. 6,84,448. It may incidentally be mentioned that among the immovable properties included was premises No. 17/1A, E, F, G, H, K and L, Marquis Lane, Calcutta, and the value and was given in the estate duty return at Rs. 31,300. The Dy. Controller estimated the fair market value of the same at Rs. 1,60,000, He thus arrived at the total value of the movables at Rs. 13,00,950 and immovables at Rs. 13,85,359 totalling a sum of Rs. 26,86,309. He allowed deduction of liabilities of Rs. 2,00,338 and computed the principal value of the estate at Rs. 24,85,971. In the said assessment order the value of the debt of Rs. 6,84,448, from M/s. K.C. Mullick & Sons Pvt. Ltd. which subsequently went into liquidation and the value whereof as contended by the accountable persons to be nil was included in the value of the estate. Similarly, the value of 500 shares of the face value of Rs. 50,000 of the company of Raja D.N. Mullick & Sons Ltd. belonging to the deceased and contended by the accountable persons to be valued at Rs. 1,42,160 was found to be worth Rs. 3,64,140 by the Dy. Controller and as such he included the said amount in the value of the estate. A sum of Rs. 1,50,000 was due against an overdraft agreement from one K. C. Mullick & Sons Ltd. to the United Bank of India Ltd. The deceased had guaranteed the repayment of the said debt and had executed in favour of the creditor-bank a personal letter of guarantee and mortgage of premises No. 17/1 A, E, F, G, H, K & L, Marquis Lane, Calcutta, by deposit of title deeds as an additional security for due repayment thereof. It was contended that at the death of the deceased the amount due to the creditor-bank was about Rs. 2,60,000 and subsequently the creditor-bank instituted a suit for Rs. 2,95,089 stated to be due against the said overdraft and a receiver was appointed over the said premises in Marquis Lane, Calcutta. No portion of this debt was allowed as deduction by the Dy. Controller in the order of assessment. It must be mentioned that in the estate duty return in schedule No. 3 which appears at p. 24 of the supplementary paper book the amount of debt sought to be claimed as deduction was Rs. 2,52,252 on account of the debt due to the United Bank of India Ltd.

(2.) On the 10th October, 1958, the accountable persons preferred an appeal against the said order of assessment dated 22nd July, 1958, before the then CBR under Section 63 of the E.D. Act, 1953. It may incidentally be mentioned that by virtue of Section 6 of the Central Board of Direct Taxes Act, 1963, all appeals pending before the then CBR stood transferred to the CBDT.

(3.) Section 59 of the E.D. Act, 1953, as amended by the E.D. (Amend.) Act, 1958, provides, inter alia, as follows :