THE CONTROLLER OF ESTATE DUTY, LUCKNOW versus ALOKE MITRA

Citation: [1981] 1 S.C.R. 943 · Decided: 10-10-1980 · Supreme Court of India · Bench: A.P. SEN · Disposal: Appeal(s) allowed

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

Judgment (excerpt)

THE CONTROLLER OF ESTATE DUTY, LUCKNOW 
v. 
ALOKE MITRA 
October 10, 1980 
[A. P. SEN AND E. S. VENKATARAMIAH, JJ.] 
The Estate Duty Act, 1953-S. 5 sub-s. (!) and s. 6-lnter relation of-
Whether property held by a benamidar passes upon the 
death of the real 
owner and should be brought to charge under sub-s. (1) of s. 6 of the Act or 
is deemed to pass under s. 6. 
Words & Phrases--Benami-Benamidar-Meaning of. 
One M carried on the business of printer and publisher. In 1953 his 
brother-in-law alongwith some other persons floated· two companies a publish-
ing firm and a printing press. 
Under an agreement dated May 29, 1953 M 
agreed to transfer his business to the newly floated companies, and on January 
24, 1954 he wrote letters intimating that.the shares in the companies be allotted 
to his wife, his 3 sons, his brother-in-law and an ex-employee. 
The com-
panies allotted the shares accordingly. 
502 shares were allotted to M in his 
own name in the publishing firm and 225 shares in the printing press. Of the 
remaining, 2002 shares in the publishing firm and 1602 shares in the printing 
press were allotted to M and his nominees. M died on February 11, 1957. On 
his death the respondent, the accountable person filed a return of estate duty 
in which he included the, value of the 502 shares in the publishing firm and 
225 shares in the printing press. 
The Assistant Controller of Estate Duty did not accept this part of the 
return and included the 2002 shares in the publishing firm and 1602 shares in 
the printing press standing in the name of the wife of the deceased, his 3 sons, 
brother-in-law and the ex-employee, since they were holding these shares benami, 
and included the value of these shares in the principal value cf the estate of 
the deceased. 
In appeal, the, Central Board of Direct Taxes, the 
Appellate 
Tribunal 
943 
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affirmed this order. It observed that the mere fact that the subject-matter was 
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the shares in· the two companies would not throw any more onus of proof on 
the Assistant Controller than would be thrown if the subject-matter was some 
other property. When money was paid by the deceased, it was for the account-
able person to prove the gift. 
The deceased had clearly mentioned in his 
letters dated January 24, 1954 to the two companies that the shares should be 
issued and allotted in the names of the persons nominated by him. 
If the 
deceased intended to make an outright gift of the shares, he would have very 
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SUPREME COURT REPORTS 
[1981] 1 S.C.R. 
well said so in the letters. There being no presumption of advancement, the 
mere fact that the shares were got issued in their names without making any 
indication of gift, would not make the nominees recipients of any gift. 
The High Court answered the reference against the appellant and in favour 
of the accountable person. 
Following the decisions of the Andhra Pradesh 
High Court in Shantabai Jadhav v. Controller of Estate Duty (1957} 31 ITR 
28 and Smt. Denabai Bomab Shah v. Controller of Estate Duty (1964) 51 ITR 
<ED) 1 it observed that since the shares stood in the name of the wife and 
sons etc., be11ami for the deceased, the deceased had no power to transfer since 
he had not obtained a_ release from the benamidars or a declaration from an 
appropriate court. 
As the deceased, remained incompetent to transfer the 
shares till his death, the property in them would not be deemed to pass upon 
his death by reason of section 6 and therefore, they would not be included 
in the estate of the deceased under section 5(1) of the Act. 
Allowing the appeal, to this Court 
HELD: 1. The liability to pay estate duty under section 5(1) of the Act 
arises upon the death of the' real owner and not of the benamidar, who is 
merely an ostensible owner. The test lies in whether upon the death of the 
benamidar, there would be inciden_ce of liability to estate duty. [961B] 
2. The finding bein_g that the shares were 
purchased by the deceased 
benami in the name of his wife and sons, the real ownership of the property 
was vested in the deceas,ed who was entitled to deal with the same as ifl it 
were his own and the bc11amidars held it in trust under section 82 of the Trust 
Act, 1882 for the benefit of the deceased. The estate, therefore, belonged to 
the deceased who died possessed of the same and under section 5(]) of the 
Act the entire value of the shares was includible in the principal value of

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