SATYANARAYANA MODI versus THE CONTROLLER OF ESTATE DUTY, DELHI AND RAJASTHAN, NEW DELHI

Citation: [1970] 1 S.C.R. 712 · Decided: 31-07-1969 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Dismissed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

712 
SATYANARAYANA MODI 
v. 
THE CONTROLLER OF ESTATE DUTY, DELID AND 
RAJASTIIAN, NEW DELm 
July 31, 1969 
[J.C. SHAH, ACTING CJ., V. RAMASWAMI ANDA. N. GROVER, JJ.] 
Estate Duty Act 34 of 1953-Section 10-Gift of fixed deposit receipts 
-Donor retaining important benefits-If donee can be said to assume 
immediately bona fide possesslon and enjoyment within meaning of s. 10. 
P held, on April 1, 1953, three deposit receipts with the State Bank 
C" 
of Bikaner. At her instance the receipts were !renewed in the joint names 
of herself and S (son of her adopted son) payable to either or survivor. 
On August 16, 1953 P executed a deed of gift in favour of S in respect 
of the three receipts. The gift deed contained a confirmation by S's father 
that he had accepted the gift for and on behalf of and as the natural 
guardian of S "to the effect that the said S shall be the absolute owner of 
the sum gifted". P addressed a letter to the Bank enclosing a copy of the 
n. 
declaration of gift and intimated the Bank that S was the sole owner of 
.,. 
the amount of the receipts and till S attained the age of majority the 
receipts should remain in the joint names. From time to time P presented 
the receipts for renewal when they matured and obtained fresh receipts 
in the joint names of herself and S. 
On August 25, 1955, the third 
receipt was encashed and out of the amount realised a part was invested 
in the name of S in National Savings Certificates and the balance was 
deposited' in the name of S alone with a firm. The other two receipts were 
K 
renewed in the joint names of P and S. After the death of P on February 
15, 1956, the two receipts were encashed by S. 
The Assistant Controller of Estate Dnty held that possession and en-
joyment of the gifted property was not assumed by the donee to the 
entire exclusion of the donor and on that account under section 10 of the 
Estate Duty Act, 1953, the amount of the two receipts and interest thereon 
formed part of the estate of P and was liable to estate duty. 
Regarding 
F-
the 
third receipt it was held that even though the earlier receipt was 
discharged on August 25, 1955, i.e. within 2 years of the death of P and 
the amount was invested in the name of S, by virtue of the provisions 
of the Act the amount held in the name of S alone was for assessment 
of Estate Duty liable to be included in the estate of P. 
The Central 
Board of Revenue and the High Court confirmed this order. 
In appeal to this Court it was contended that P did everything possible 
G 
to 
divest 
herself 
of . her 
interest 
in 
the 
money 
held 
by her in deposit with the Bank and retained no interest therein and that in 
obtaining renewal of the receipts in the joint names of herself and of S, 
P was merely a benamidar and in any event was acting on behalf of S. 
HELD : Dismissing the appeal, 
(i) The question whether the amount of deposit receipts was liable to 
estate duty must be determined on the true effect of s. 10 of the Estate 
Duty Act, 1953. The section clearly means that if in respect of any 
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E 
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G 
H 
S. MODI v. CONTROLLER, ESTATE DUTY (Shah, Ag. C.J.) 
713 
property which is . gifted, bona fide possession and enjoyment is not im-
mediately assumed by the donee and thenceforward retained by him to 
the entire exclusion of the donor of any benefit to him therein the pro-
perty gifted shall not be excluded from the estate 
subject 
to 
estate 
duty. [718 B] 
In the present case P retained important benefits in herself in the fixed 
deposit receipts. There was also no evidence that in obtaining the receipts 
in the joint names P 8.cted as a guardian of S nor that she was a benam.i-
dar of S. [718 FJ 
(ii) Though the third receipt was encashed during the life time of 
P, and the amount w:as invested in the name of S alon~\ the encashment 
and reinvestment were within two years of the death of P and the amounts 
so reinvested were liable to be included in the estate of P. [718 G] . 
CIVIL APPELLATE JURISDICTION : 
Civil Appeal No. 438 of 
1967. 
Appeal from the judgment and order dated April 11, 1966 of 
the Rajasthan High Court in D. B. Civil Reference (Estate Duty 
Act) No. 16 of 1963. 
M. C. Chagla, B. D. Sharma and M. D. Bhargava, for the 
appellant. 
Jagdish Swarup, Solicitor-General, T. A. Ramachandran, 
R. N. Sachthey and B. D. Sharma, for the respondent. 
The Judgment of the Court was delivered by 
Shah, Ag. C.J. 
Purnabai widow of Sagarmal Mody held on 
Apr

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