Law: Estate Duty Act, 1953

Section: 64(1)

Section 46, read with section 16, of the Estate Duty Act, 1953 - Further limitations - Whether under clause (a) and (b) of section 46(1) abatement of consideration can only be to extent of value of property derived from deceased and any excess of consideration would be outside purview of that section - Held, yes - Whether in order to attract section 46(1)(a), consideration for debt should have consisted of property derived from deceased which means that property which constituted consideration shall have been in existence on date when debt was incurred and, therefore, future interest payable on loan could not have constituted consideration - Held, yes Words and phrases : Words 'at any time' as occurring in section 46(1) of the Estate Duty Act, 1953. facts The deceased had on 31-3-1955, gifted Rs. 50,000 to each of his three minor sons. The mother and guardian of the minors, accepted the gifts on behalf of the minors. She requested the deceased to keep the money with him as deposit bearing interest at 7½ per cent. In the books of account of the deceased his capital account was debited with a sum of Rs. 1,50,000 and corresponding credits were given in the accounts of the three minors. The deceased also executed three promissory notes promising to repay the deposits with interest at 7½ per cent. Interest due on these amount totalling Rs. 11,62,205 were credited and withdrawals of Rs. 82,500 also were made. The credit balance in the accounts of minors as on the date of death of deceased was Rs. 1,83,705. The mother as the accountable person, filed a return in which she had claimed the credit balance totaling Rs. 1,83,705 as liability due from the estate. The Assistant Controller held in view of the definition in section 16(2) the interest credited to the sons' accounts would also be "property derived from the deceased" within the meaning of section 46(1)(a) and that the entire sum of Rs. 1,83,705 standing to the credit of the three minors would, therefore, have to be disallowed under the provisions of section 46(1)(a). He also held that for the applicability of section 46(1)(a) it was not necessary to prove that the property was derived from the deceased with a…

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