Decided on October 04,1968



- (1.) THIS is a reference made by the Madras Bench of the Income-Tax Appellate tribunal under Section 64 (1) of the Estate Duty Act, 1953, on the application of the Assesses. The questions referred are: (1) Whether on the facts and in the circumstances of the case, the sum of Rs. 25,000/- deposited by the assessee in the Bank in the name of his minor son K. L. Baby on 2-1-1957 is includible in the estate of the deceased under Section 10 of the Estate Duty Act? (2) Whether on the facts and In the circumstances of the case, the value of the agricultural properties gifted by the deceased to his sons under the gift deed dated 14-12-1956 is includible in the estate of the deceased under Section 10 of the Estate Duty Act?
(2.) KANNAMPILLY Lonappan Lonakunju died on 14-12-1962. On 2-1-1957 he deposited a sum of Rs. 25,000/- in the Catholic Syrian Bank, Ltd. , in the name of his minor son, K. L. Baby. The deceased was the guardian; and in that capacity, he drew the interest from the bank. He did not maintain any accounts regarding the amounts so withdrawn. On 14-12-1956, he executed a deed of gift in respect of some immovable properties in favour of his seven sons, of whom there were three minors. He took powers-of-attorney from the major sons, and he was managing these properties till his death as attorney of the major sons and guardian of the minors. On 2-9-1962, he executed his last will, which stated, among other things, that the income of the gifted properties was utilised by him to the extent of Rs. 49,000 and that the said sum can be recovered by the donee from his Estate. The Appellate Tribunal and the subordinate authorities held that the aforesaid sum of Rs. 25,000/- and the properties gifted by the deceased to his sons would be deemed to be properties passing on the death of the donor by virtue of Section 10 of the Act.
(3.) SECTION 10 reads: "gifts whenever made where donor not entirely excluded: Property taken under any gift, whenever made, shall be deemed to pass on the donor's death to the extent that bona fide possession and enjoyment of it was not immediately assumed by the donee and thenceforward retained to the entire exclusion of the donor or of any benefit to him by contract or otherwise. " Dealing with the deposit of Rs. 25,000/- in the name of the minor son of the deceased, the Appellate Tribunal stated: "the mere deposit of a sum of money in the Bank in the name of another person does not, by itself, constitute a valid gift of that amount in favour of that person. There must be some other evidence to show that the donor intended to permanently part with his absolute rights over the gifted properties in favour of the donee and that the donee also accepted the gift There is no such evidence in this case. There was nothing to prevent the deceased from withdrawing this amount from the bank at any time he liked. Admittedly, the deceased had received the interest that had accrued on the deposited amount. The deceased did not maintain any account to show that he had credited the interest income in the name of his minor son. There was no need for the deceased to have withdrawn the interest from the Bank and he could have allowed it to lie in the Bank itself to the credit of the minor if it was his intention that the interest income should also go to benefit of the minor. The deceased, therefore, not only retained possession of this amount but also enjoyed the benefit arising from the gifted properties in the shape of interest income. Therefore, this amount of Rs. 25,000 also has been rightly included in the estate of the deceased and such inclusion is hereby confirmed. ";

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