JAI NARAYAN JAI GOVIND Vs. CONTROLLER OF ESTATE DUTY MADRAS

JUDGEMENT

(1.) THIS reference arises under section 64(1) of the Estate Duty Act (34 of 1953) and raises the following questions : "1.Whether, on the facts and circumstances of the case, the sum of Rs. 1, 33, 277 was joint family property "/

(2.) WHETHER, on the facts and circumstances of the case, the Manbhari Bai Charity Trust did not come into effect on the 2nd November, 1948, or only in 1951 "" * The facts giving rise to the reference are these : Dalooram Jai Narayan, a successful businessman in Madras, was the karta of a Hindu undivided family consisting of himself and his son, Jai Narayan Jai Govind, Dalooram's wife, by name, Manbhari Bai, died on 19th May, 1945. At the time of her death there existed in the business accounts of the family a credit entry of Rs. 75, 000 in her favour. Some time prior to her death, she appears to have given a direction to her husband that a sum of Rs. 31, 000 out of the amount standing to her credit in the family business accounts should be set apart for the creation of a permanent trust for establishing and conducting a Sanskrit Patasala in her name she also directed her husband to take necessary steps in that regard. Nothing, however, appears to have been done towards the starting of the patasala for about three years after the death of Manbhari Bai. The amount standing to her credit was not even transferred to the name of her son, Jai Narayan, her sole heir.

(3.) THOSE conclusion were affirmed on appeal by the Central Board of Revenue who held that the sum standing to the credit of Manbhari Bai, though inherited by Jai Narayan as his separate property, was subsequently thrown into the common stock and blended with the joint family properties. It was also held that the trust should be deemed to have come into effect on the date of the trust deed, namely 5th April, 1951, and not of 2nd November, 1948, when there was a transfer of the funds in the books of account in favour of the trust. The appellant authority namely, the Central Board of Revenue did not, however consider the question whether the credit entry in favour of Manbhari Bai was a sham one, the amount represented by it belonging only to the family. The questions that have been referred to us proceed on the footing that the monies represented by the credit entry in the books belonged to Manbhari Bai.Mr. Ranganthan appearing for the Controller of Estate Duty, however, contended that the questions are wide enough to include a case that the monies at no time belonged to Manbhari Bai. We cannot accept the contention. It is obvious from the from of the questions referred to us, that they proceed on the footing that the funds belonged to Manbhari Bai as her stridhana property. Even otherwise, there is ample material to support the view that the monies standing to the credit of Manbhari Bai in the family accounts were her stridhana property. As early as 24th of January, 1940, both Dalooram and his son, Jai Narayan, had executed a promissory note in favour of Manbhari Bai for a sum of Rs. 75, 000 which represented the amount then due and was standing to here credit in the accounts of the family. There was further a registered agreement which evidenced deposit of title deeds as security for the loan. Interest was regularly credited to her account. Deduction in respect of interest was allowed by the income-tax department up to the assessment year 1936-