LexSAROJINI AMMAL versus THE CONTROLLER OF ESTATE DUTY, MADRAS
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
A SAROJINI AMMAL v. THE CONTROLLER OF EST ATE DUTY, MADRAS SEPTEMBER 18, 1996 B (S.P. BHARUCHA AND K. VENKATASWAMI, JJ.) Estate Duty Act, 1953: Section JO. Estate-Plincipal value of-Gifted amounts-Includibility in-Business C man made unconditional gifts to his daughters who accepted the same-Sub- sequently, as per request of daughters a pa1tnership Jinn comp1ising donor- f ather and donee-daughters was f om zed-Amounts gifted retained in business and utilised as share capital of donee-daughters in pa1tnership Jinn-Later donor-father died-Held: In the circumstances of the case, amounts of gift retained in business was not includible in the p1inciple value of the estate of D the deceased. The proprietor of a business concern made unconditional cash gifts to his daughters and they accepted the same. Subsequently, as per the request made by the said daughters a partnership firm comprising the E donor-father and the donee-daughters was formed and the amounts gifted to the donee- daughters were retained in the business and utilised as share capital of the donee-daughters in the partnership firm. Later the donor- father died. The Assistant Controller of Estate Duty held that the gifted amounts were liable to be included in the principal value of the estate of the deceased donor under Section 10 of the Estate Duty Act, 1953. The High F Court confirmed this assessment. Being aggrieved the appellant preferred the present appeal. Allowing the appeal, this Court HELD: 1. When the gift was made and accepted, it was unconditional. G the donees requested that a partnership be formed and the amounts gifted be retained and utilised as share capital of the donees in the partnership firm to be formed. There is nothing, in this case, to suggest that parting with the enjoyment or benefit by the donee, or permitting the donor to share them out of the bundle of right gifted in the property is referable to the gift. H Hence, the amounts of gift retained in business was not includible in the 472 SAROJINI AMMAL v. CONIROLLER OF ESfA1E DUfY [VENKATASWAMI, J.)473 - principal value of the estate of the deceased. [476-H, 477-A] Controller of Estate Duty, Kera/av. R. V. Vishwanathan & Ors., [1977] 1 sec 90 ' relied on. A Controller of Estate Duty, Punjab & Haryana, Jammu & Kashmir, Himacltal Pradesh and Chandigarh v. Kamalavati, [1979) 4 SCC 265, held B inapplicable. CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2513 of 1981. From the Judgment and Order dated 23.1.79 of the Madras High C Court in T.C. No. 98 of 1975. A.T.M. Sampath for the Appellant. Dr. R.R. Misra, R.C. Ramesh and S.N. Terdol for the Respondent. D The Judgment of the Court was delivered by VENKATASWAMI, J. In this appeal by a certificate granted by the High Court of Madras under section 65 of the Estate Duty Act, 1953 (hereinafter referred to as "the Act"), the vexed question of applicability E or otherwise of section 10 of the Act arises for decision of this Court. One Murugesa Mudaliar, the deceased, passed away on 15.10.1964. He was carrying on a business under the name and style of 'Newton & Company' a proprietory concern. On 20. 7.1962, the deceased made two cash gifts of Rs. 40,000 each to his two daughters, namely, Smt. Rajeswari F and Gnanambigai by debiting his capital account and crediting their ac- counts in his personal business book. On 20.7.62, both the donees wrote letters to the deceased accepting the gifts and thanking their father. Again on 27.7.62 each donee by separate letters thanking once again for the gifts requested the deceased to retain the same in the business and admit them G as partners. Accordingly, a partnership was formed with effect from 1.8.1962 in which the donees and also the donor were the partners. As noticed, the deceased passed away on 15.10.1964. A question arose, inter alia, whether on the facts and in the circumstances of the case, the gifts of Rs. 80,000 in all made by the deceased to his two daughters by debiting his capital account and crediting the accounts of the donees in his personal H 474 SUPREME COURT REPORTS (1996) SUPP. 6 S.C.R. A business book could not be included in the principal value of the estate of the deceased under section 10 of the Estate Duty Act. The Assistant Controller of Estate Duty overruling the objection of the accountable persons concluded that since the gifted amounts were not taken possession of and enjoyed by the donees to the entir
Excerpt shown. Read the full judgment & AI analysis in Lexace.