Decided on February 06,1979

Lilavati Muljibhai Respondents


B.K.MEHTA, J. - (1.) MULJI Valji died on November 13, 1968. He was a partner in Liberty Rest House and was also deriving income from interest from Gunvantrai Mulji and Brothers. The deceased made cash gift in a sum of Rs. 69,000 on March 16, 1963, to his eldest son Kantilal. The said Kantilal in his turn made gift of Rs. 23,000 to each of his two minor brothers on March 17, 1963. The said three brothers subsequently purchased a property known as 'Mahesh Nivas' situate in the town of Junagadh for Rs. 1,71,000. The aforesaid consideration included the amount of the cash gift by the deceased, viz., Rs. 69,000. There were shops on the groundfloor of the said property, which were let out to various tenants. The first floor of the building was, however, partly used for the residential purposes of the deceased Mulji Valji and his three sons. It was partly used for accommodating Liberty Rest House.
(2.) THE Asst. CED on these facts held that the deceased Mulji Valji was not entirely excluded from the benefit and enjoyment of the subject -matter of the gift and he, therefore, added Rs. 69,000 to the taxable estate. The accountable person, therefore, carried the matter in appeal before the Appellate Controller before whom it was, inter alia, contended that s. 10 of the E.D. Act, 1953, was not attracted to the case as the subject -matter of the gift was a different property from the one, the partial use of which by the donor attracted s. 10. This contention of the accountable person did not impress the Appellate Controller, who, in view of the definition of the word 'property' in s. 2(15) of the E.D. Act held that the property taken under the gift would also include the converted property and, therefore, confirmed the order of the Assistant Controller.
(3.) IN further appeal before the Tribunal, at the instance of the accountable person, it was contended that conversion as stipulated in s. 2(15) of the Act, could not cover the conversion made by the donee and, therefore, s. 10 was not attracted on the facts and in the circumstances of the case. The Tribunal accepted this contention of the accountable person and reversed the order of the Assistant Controller. At the instance of the revenue, therefore, the following question is referred to us for our opinion under s. 64(1) of the E.D. Act: 'Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the value of the property to the extent of Rs. 69,000 was not includible in the principal value of the estate of the deceased under s. 10 of the E.D. Act, 1953, and thereby deleting the addition of Rs. 69,000 from the dutiable estate ?' ;

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