Law:

Section:

JUDGMENT This is a reference made by the Income-tax Appellate Tribunal at the instance of the Controller of Estate Duty, Jaipur, under section 64(1) of the Estate Duty Act, 1953, and it refers a question to be answered by this court in the following form : " Whether, on the facts and in the circumstances of the case, the provisions of section 10 of the Estate Duty Act, 1953, were applicable to this case?" The facts giving rise to this reference are, in a nutshell, as follows : Shri Motilal Sanghi made a gift of Rs. 1 lakh on 1st of September, 1955, in favour of his four sons, each one to get Rs. 25,000. This amount was invested by the sons in a firm known as Sanghi Brothers of which Motilal Sanghi was a partner to the extent of 8 annas and each donee had a share to the extent of annas 2 in the firm. We are told by learned counsel appearing on behalf of the accountable person, Shri N.K. Sanghi, that the said firm was managed not by Shri Motilal Sanghi but it was managed by Shri N.K. Sanghi, the eldest son of the donor. Shri Motilal Sanghi died on 21st of July, 1961. The Assistant Controller of Estate Duty while assessing the properties of Shri Motilal Sanghi under the provisions of the Act gave a show-cause notice to the accountable person why the amount of Rs. 1 lakh given by the deceased to his 4 sons as gift be not added to the estate of the deceased as that amount was not retained by the donees to the entire exclusion of the donor. The Assistant Controller, after hearing the accountable person held that section 10 of the Estate Duty Act was clearly applicable in this case and accordingly he added Rs. 1 lakh to the estate of the deceased. An appeal was preferred against this order before the Appellate Controller of Estate Duty, who set aside the order of the Assistant Controller and, relying on a decision of the Assam High Court in Controller of Estate Duty v. Birendra Kumar Sen [1964] 53 ITR (ED) 1 (Assam), held that section 10 was not attracted to the circumstances of the present case. This judgment of the Appellate Controller of Estate Duty was also upheld by the Appellate Tribunal. The department, therefore, applied for making a reference to this court…

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