Law:

Section:

Section 5 of the estate duty act, 1953-Property passing on death-Whether, in case of benami transaction, value of property held by a benamidar passed upon real owner's death and is includible in deceased's estate under section 5-Held, yes-Whether chargeability to estate duty under section 5 is limited and controlled by section 6- Held, no Facts Under an agreement, dated 29-5-1953, the deceased transferred his publication business to M (P.) Ltd. for a consideration of Rs. 7,500 in cash and 2,002 fully paid up shares of Rs. 100 each and his printing business to MP (P.) Ltd. for a consideration of Rs. 4,800 in cash and 1,602 fully paid up shares of Rs. 100 each. The said shares were to be allotted in the name of the deceased or his nominees. On deceased's request, 502 shares of M (P.) Ltd. and 225 shares of MP (P.) Ltd. were allotted to him and the remaining shares of the said two companies were allotted to his wife, three sons, brother-in-law and an ex-employee of his. The deceased, indisputably, had supplied the entire purchase consideration for the aforesaid shares. On deceased's death on 11-2-1957, the Assistant Controller included in his estate the value of not only the shares standing in his name but also of those standing in the name of his wife, sons, etc., on the ground, inter alia, that the shares standing in the name of the deceased's wife, sons, etc., really belonged to him as they were merely hisbenamidars. The CBDT upheld the decision of the Assistant Controller. The High Court, on reference under section 64(3), held (i) that since the shares stood in the name of deceased's wife, sons, etc., the. deceased had no power to transfer them since he had not obtained a release from the benamidars or a declaration from an appropriate court ; and (ii) that the deceased thus remained incompetent to transfer the shares till his death, and so the property in them would not be deemed to pass upon his death by reason of section 6 and, therefore, shares were not includible in the deceased's estate under section 5(1). On appeal : Held 1. In applying the statute to any particular transaction, regard must be had to its substance, that is, its true legal effect, rather…

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