H.N. Seth, J. - (1.) THE Central Board of Direct Taxes had made this reference under Section 64(1) of ihe Estate Duty Act, 1953, at the instance of Sri Vithal Das, the accountable person. It has referred the following questions for the opinion of this court : "(1) Whether, on the facts and in the circumstances of the case, only half share of the properties included in the estate duty assessment of the deceased should have been included as property passing or deemed to pass on his death under Section 7 of the Act ? (2) Whether, on the facts and in the circumstances of the case, the amount of Rs. 80,000 standing in the names of the grand-children of the deceased was correctly included in his estate ?"
(2.) THIS reference arises out of proceedings in connection with the estate duty assessment in respect of the estate of late L. Kedar Nath, who died on the 8th of September 1955. Sri Vithal Das, the eldest son of the deceased, filed the estate duty return in respect of the properties left by Kedar Nath, as accountable person under the Act. He showed the value of the estate left by the deceased as Rs. 1,57,764. The Assistant Controller ot Estate Duty, however, computed the value of the estate as Rs. 3,09,972 and levied the estate duty accordingly. During the assessment proceedings, it was claimed that the deceased had only half share in certain properties. The other half share in those properties belonged to his wife, Smt. Godawari Devi. According to the accountable person, these properties originally belonged to a joint Hindu family having five branches. The deceased was the head of one of the branches, which consisted of himself, his wife and two sous. A partition in the family took place in the year 1936. At that time, the deceased and his two. sons also separated. As a result of that partition the deceased and his two sons got 1/3rd of 1/5th share each in the entire joint Hindu family property. The wife of the deceased neither claimed, nor was she allotted, any share in the joint family property. The accountable person, therefore, claimed that the share allotted to the deceased included the share of the wife as well. In the circumstances, the deceased was the owner of only half of the property which came to him as a result of the partition in the year 1936, and that share alone passed on his death. The other half share continued to belong to Smt. Godawari Devi, wife of the deceased and it did not pass to any one on the death of the deceased. The Assistant Controller repelled the claim made by the accountable person and held that the circumstances of the case indicated that the wife and other ladies of the family renounced their claim to the joint family property. In any event, Smt. Godawari Devi acquiesced in the partition for more than 12 years and, therefore, she could not enforce her right to the share acquired in the family property as a result of the partition which took place in the year 1936. In the circumstances, the share allotted to the deceased became his separate property and the whole of it had to be included in the estate duty assessment. The Assistant Controller also discovered certain deposits amounting to Rs. 80,000 in the names of five grandsons and one grand-daughter of the deceased (Rs. 15,000 each in the names of the grandsons and Rs. 5,000 in the name of grand-daughter). It was claimed that these amounts had been gifted by the deceased to his grand-children on 9th May, 1952, more than two years before his death. It was found that a debit entry of Rs. 80,000 was made in deceased's account with Messrs. Girdhari Lal Kedar Nath of Tanda. There were corresponding credit entries in the newly opened accounts in the names of the deceased's grandsons and granddaughter. The Assistant Controller found that the cash balance in the firm account on the date on which the above entry was made was Rs. 7,745 only. According to him there was neither a registered instrument of transfer, nor delivery of possession of the property alleged to have been gifted by the deceased, and that the essentials of a valid and completed gift were absent in the present case. The assessee brought to the notice of the Assistant Controller that the aforesaid gifts were made by the book entries and were accepted on behalf of the minors by their respective fathers. These sums were later on withdrawn from the books of Messrs. Girdhari Lal Kedar Nath of Tanda and got credited in the books of Bhawani Prasad Girdhari Lal Hatia, Kanpur, where the deceased was not a partner. The latter firm paid interest to the minors on the amount standing in their names. The Assistant Controller found that the transfer of accounts from the books of Girdhari Lal Kedar Nath, Tanda, to the books of Messrs. Bhawani Prasad Girdhari Lal, Kanpur, took place on 3rd November, 1953. At that time the amount was transferred only by making book entries and no cash passed from the Tanda firm to the Kanpur firm. It was only on 4th of August, 1955, that for the first time an amount of Rs. 6,000 was remitted from Tanda to Kanpur. This was followed by remittances amounting to Rs. 20,000, Rs. 12,000 and Rs. 25,000 made on 16th of August, 1955, 5th September, 1955, and 6th September, 1955, respectively. According to the Assistant Controller, neither the transfer entries made in the books of the two firms, nor the remittances of cash had the effect of validating the gift alleged to have been made on 9th of May, 1952. In any case as these remittances were made within two years of the death of the deceased, the amount gifted was liable to be included in the estate of the deceased under Section 10 of the Act. In the result he included the sum of Rs. 80,000 also in the value of the estate which according to him passed on the death of the deceased.
(3.) THE accountable person preferred an appeal to the Board against the order of the Assistant Controller of Estate Duty, inter alia, on the ground that the Assistant Controller was not justified in including the entire value of the property standing in the name of the deceased and the sum of Rs. 80,000 in the estate of the deceased. THE Board found that although the partition in the family had taken place as far back as the year 1936 without any share being allotted to the wife, the lady neither contested the partition nor claimed any share in the property. In these circumstances, it could be presumed that she relinquished her interest in the coparcenary property in favour of her husband and sons. It held that the deceased was the owner of the entire property which he received as a result of family partition, and the whole of it passed on his death. Entire value of those properties was, therefore, rightly included in the value of the estate of the deceased passing on his death liable for payment of estate duty. So far as the question, regarding including the sum of Rs. 80,000 said to have been gifted by the deceased on 9th May, 1952, to his grand-children was concerned, it was claimed that the amount was gifted on 9th May, 1952, by debiting the account of the deceased in the books of the firm, Girdhari Lal Kedar Nath, and opening corresponding accounts in the names of the grand-children. The debit entry indicates that it was being made under instructions from Sri Kedar Nath. It bore the signature of the deceased. The credit entries iu the names of the grand-children were signed by their respective guardians. These, accounts were later on squared up on 3rd November, 1953, by transferring the amount to the credit of the grand-children in the firm, Messrs. Bhawani Prasad Girdhari Lal of Kanpur. The Board, however, foun.d that no cash passed from Tanda firm to the Kanpur firm till 4th August, 1955, when a sum of Rs. 6,000 was remitted. Subsequently, some more money amounting to Rs. 52,000 was remitted by the Tanda firm to the Kanpur firm up to the date of the death of the deceased. The Board concluded that the signatures underneath the debit and the credit entries in the books of the Tanda firm were appended afterwards so as to create evidence indicating acceptance of the gift. In the circumstances, even if the deceased wanted to make a gift of the money to his grand-children on 9th of May, 1952, the gift was incomplete and invalid and, therefore, the money credited to the account of the grandchildren must be taken to belong to the deceased and deemed to pass on his death on 8th of September, 1955. The Assistant Controller was, therefore, justified in including this amount in the value of the asset of the deceased liable for payment of estate duty.;