Law:

Section:

Section 17 of the Estate Duty Act, 1953 - Transfer of property - Whether where deceased was a managing director of a company, delay in drawing remuneration and other perquisites by him to which he was entitled, could not be regarded as 'transfer' within meaning of section 17 by him of undrawn salary and benefits to company, which would render a part of assets of company includible in his estate - Held, yes - Whether liability for payment of estate duty was limited to amount, which was due to deceased from company - Held, yes FACTS The deceased was the managing director of a company. The accountable person had in the return treated the balance of the credit amount of the deceased which represented undrawn remuneration and value of the perquisites due to him, as forming part of his estate. However, the assessing authority invoked section 17 and added a part of the value of the company to his estate by treating the remunerations of the deceased; the dividend received by him for three years and other benefits received by him, such as commission and perquisites for three years, as benefits accruing to the deceased in that period, the accrual of which benefits resulted in the assets of the company determined in accordance with the other portions of section 17 being includible in his estate. That view of the assessing authority was upheld in appeal by the appellate authority as also by the Tribunal. On reference : HELD The object of section 17 is to prevent evasion of duty by individuals owning valuable property divesting themselves of such property and transferring it to the company which is controlled by such persons or their nominees and even thereafter continue to retain control over the property so transferred and enjoy the benefits therefrom. The section clearly is not intended to treat the fruit of labour of any individual who by floating the company and contributing his skill and labour as a director or as other officer of the company receive remuneration for the services rendered by him to such company, as exigible to estate duty. Mere delay in drawal of the remuneration would not have the effect of his transferring to the company the undrawn salary, thereby…

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