Controller of Estate Duty Vs. Smt. G. Dhanamani - Court Judgment

Excerpt:
head note: income tax estate duty property deemed to pass under s. 9--gift by book entry--validity ratio: since the gifts were made by donor by making book entries, and he continued to use the funds in his business till his death, therefore, said gift was not valid and thus the property in said amount passed on only after his death and not at the time of making book entries. held: the finding of the tribunal is that only by book entries, the alleged gifts were made by the donor and it is clear from the finding that the funds continued to be used by the deceased in his business. if that is so, on the basis of the decision of this court in muthappa chettiar's case the gifts made by the deceased were not valid in law and the logical consequence is that the money continued to be the property of the deceased which passed on his death. hence, there is no question of either applicability of section 9 or section 46 of the estate duty act to the facts of the case. case law analaysis: e.m.v. muthappa chettiar v. cit (1945) 13 itr 311 (mad) followed. application: not to current assessment year. estate duty act 1953 s.9 estate duty act 1953 s.46 counsel :c. v. rajan, for the revenue : none, for the accountable person - m. v. balasubramanian, j.at the instance of the ced, madras, the tribunal has forwarded the statement of the case and referred the following question of law under s. 64(1) of the st act, 1953 :'whether, on the facts and in the circumstances of the case, the tribunal was right in holding that the two gifts of rs. 5,000 each made by the deceased to his grand children by making books entries in the books maintained for his personal business, would not at all constitute a valid gift and hence neither the inclusion of the gifts under s. 9 of the ed act nor the abatement of the debts under s. 46(1) is sustainable?'2. one govindaraja mudaliar, who died on 4th jan., 1976 made two gifts of rs. 5,000 to his grandchildren, i.e., rs. 5,000 to p. gajalakshmi and rs. 5,000 to s. dhanral by making book entries in the books maintained for his personal business. the addl. ced held that the gifts have been made within two years prior to his death and hence, under s. 9 of the ed act, the amounts received were- includible in the ed of the deceased. he also invoked the provisions of s. 46 of the ed act and made further addition of rs. 10,000 to the value of the said amount that passed on the death of govindaraja mudahar. the aced on appeal, deleted the additional amount on the ground ' that there could not be two additions, one under s. 9'and another under s. 46 of the act, and, therefore, held that only one addition was possible. the department filed an appeal before the tribunal on the ground that both the additions under s. 9 as well as s. 46 are possible, if the statutory conditions for invoking the provisions of s. 9 as well as s. 46 are satisfied. the tribunal, however, found that the deceased made the gift by making entries in his own personal books and there was no gift in the eye of law. according to the tribunal, when there was a gift by mere book entries, the gift was not effective or valid in law. the tribunal, therefore, held that the amounts are includible in the value of the estate that passed on the death of the deceased under s. 5 of the ed act. it further held that since s. 9 was held to be not applicable, s. 46 of the ed act also will not apply.3. it is this order that is the subject-matter of the present case. mr. c.v. rajan, learned standing counsel appearing for the revenue, brought to the notice of this court the finding of the tribunal. the gifts were made by making entries in the assessee's personal books of account and the amounts gifted were retained by the deceased in his individual money lending business. this court in the case of e.m v. muthappa chettiar vs. cit : [1945]13itr311(mad) has held that mere book entries would not be sufficient to constitute a valid gift, particularly when the gifts or funds we found to be used in the donor's business. the finding of the tribunal is that only by book entries, the alleged gifts were made and it is also from the finding that the funds continued to be used by the deceased in his business. if that is so, on the basis of the decision of this court as in muthappa chettiar's case cited supra, the gifts made by the deceased were not valid in law and the logical consequence is that the money continued to be the property of the deceased which passed on his death. hence, there is no question of either applicability of s. 9 or s. 46 of the e-d act to the facts of the case.4. apparently, the tribunal was right in its conclusion that there was no valid gift in the eye of law. therefore, we answer the question of law referred to us in the affirmative and against the revenue. no costs.