CONTROLLER OF ESTATE DUTY WEST BENGAL Vs. B V KAPADIA ACCOUNTABLE PERSON TO THE ESTATE OF LATE V B KAPADIA
LAWS(CAL)-1976-4-8
HIGH COURT OF CALCUTTA
Decided on April 09,1976

CONTROLLER OF ESTATE DUTY, WEST BENGAL Appellant
VERSUS
B.V.KAPADIA Respondents


Referred Judgements :-

CONTROLLER OF ESTATE DUTY,MADRAS V. IBRAHIM GULAM HUSSIN CARRIMBHOY [REFERRED TO]
H.R.MUNRO AND ORS. V. COMMISSIONER OF STAMP DUTIES [REFERRED TO]
MESSRS CLIFFORD JOHN CHICK AND ANR. V. THE COMMISSIONER OF STAMP DUTY [REFERRED TO]
CONTROLLER OF ESTATE DUTY,MYSORE V S ASWATHANARAYANA SETTY AND ANR [REFERRED TO]
RASH MOHAN CHATTERJEE AND ANR. V. CONTROLLER OF ESTATE DUTY,WEST BENGAL [REFERRED TO]
GEORGE DA COSTA V. CONTROLLER OF ESTATE DUTY,MYSORE [REFERRED TO]
CONTROLLER OF ESTATE DUTY,MADRAS V. C. R. RAMCHANDRA GOUNDER [REFERRED TO]
CONTROLLER OF ESTATE DUTY,MADRAS V. N.R. RAMANATHNAM AND ORS. [REFERRED TO]
CONTROLLER OF ESTATE DUTY V. N.K.SANGHI [REFERRED TO]
SEKARLAL CHUNILAL AND ORS V CONTROLLER OF ESTATE DUTY [REFERRED TO]
RADHABAI RAMCHAND V. CONTROLLER OF ESTATE DUTY,MADRAS [REFERRED TO]
CONTROLLER OF ESTATE DUTY,MADRAS V. SMT. PARVATI AMMAL [REFERRED TO]
CONTROLLER OF ESTATE DUTY,PUNJAB V. JAI GOPAL MEHRA [REFERRED TO]
CONTROLLER OF ESTATE DUTY V. THANWAR DASS [REFERRED TO]
CONTROLLER OF ESTATE DUTY,MADRAS V. S. M. M. SUBRAMANIAN CHETTIAR [REFERRED TO]
ADDANKI NARAYANAPPA VS. BHASKARA KRISHNAPPA DEAD AND THEREAFTER HIS HEIRS [REFERRED TO]


JUDGEMENT

- (1.)The following question is involved in the Reference under Section 64(1) of the Estate Duty Act, 1953: -
"Whether, on the fact and in the circumstances of the case, a sum of Rs.75,000/- would be deemed to pass within the meaning of Section 10 of the Estate Duty Act, 1953?"
The facts stated in the statement of the case are as follows: The deceased was a partner of Messrs. B. A. Brothers, Calcutta; on November 7, 1953 he made a gift of Rs.1 lakh to his daughter by making entries in the books of the said firm; the donee received the gifted amount on November 7, 1953, and on the same day became a partner of the said firm by contributing Rs.75,000/- as her capital out of the gifted amount; the donor had /4/ as share and the donee had /3/ as share in the said firm with effect from that date; and the donor died on October 18, 1960 while he was partner of the said firm.
(2.)Rs.75,000/- was included in the valuation of the estate of the deceased under Section 10 of the Estate Duty Act, 1953, hereinafter referred to as "the Act," by the Assistant Controller of Estate Duty whose order was sustained by the Appellate Controller of Estate Duty by following the decision of the Privy Council in the case of (1) Messrs. Clifford John Chick and Anr. v. The Commissioner of Stamp Duty, reported in 37 ITR 89(ED).
(3.)A further appeal was filed by the accountable person before the Appellate Tribunal. It was contended before the Tribunal on his behalf that Rs.75,000/- did not pass on the death of the donor under Section 10 of the Act, for according to him, the donor had no right to possess or enjoy this amount and that Chick's case had no application to the fact and circumstances of the case. It was also contended on his behalf that the said capital contributed by the donee could not in law be the property of the firm and therefore the deceased could neither derive any benefit out of it nor could he exercise control over it as a partner of the firm. The Tribunal, after discussing the law of partnership, quoting Lindley on Partnership (11th Edn.) at p. 406, citing Section 10 of the Act and distinguishing Chick's case, accepted those contentions and allowed the appeal in the following terms:
"It is clear on a plain reading of the section itself that only such portion of a gifted property is deemed to pass on the donor's death on which he had retained possession and benefit to himself even after making the gift. In the instant case, there could be no possession of the donor over the donee's capital even if he was a partner along with the donee in the firm in which the capital was invested by the latter, because capital, as we have stated above, not at all the property of the partnership. Nor could the donor derive any benefit out of the capital, because whatever interest or benefit accrued upon this capital went wholly and exclusively to the donee. Thus the donor having neither got possession over the sum of Rs.75,000/- nor having retained for himself any benefit therein, no part of the property, namely, the capital invested in the partnership firm Messrs. B. A. Brothers, Calcutta , could be deemed to pass on the death of the donor. The inclusion of the said amount of Rs.75,000/- in the durable assets of the deceased is, therefore, erroneous and must be deleted."
3A. Section 10 of the Act read as follows:
"Property taken under any gift whenever made shall be deemed to pass on the donor's death to the extent that bonafide possession and enjoyment of it was not immediately assumed by the donee and thence forward retained to the entire exclusion of the donor or of any benefit to him by contract or otherwise."

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