Law:

Section:

Section 17 of the Estate Duty Act, 1953-Property transferred to controlled companies-deceased maintained current as well as deposit account with controlled company and received interest from the company during statutory period prior to his death-Whether there was disposition of fund or transfer of asset by deceased to company for purposes of section 17-Held, yes-Whether cash could be considered as property for purposes of section 17(1)-Held, yes Facts The deceased, a founder director of a controlled company, had maintained a current as well as deposit account with the company and had received interest during the three years prior to his death on the amount deposited. The Assistant Controller included the slice of the assets of the controlled company, computed under section 17, in the value of the estate passing on the deceased's death. On appeal, the Appellate Controller held (i) that the deceased had not received any benefit from the company within the meaning of rule 5 of the Estate Duty (Controlled Companies) Rules ; (ii) that the current account did not represent any disposition of fund nor was there any transfer of property made by the deceased to the company ; and (iii) that, therefore, the provisions of section 17 would not apply to the facts of this case. On second appeal, the assessee contended, inter alia, that cash was not property for purposes of section 17. The Tribunal held that though the deceased had received benefit by way of interest during the statutory period prior to his death from the controlled company, the condition about transfer of assets by the deceased was not satisfied on the facts of the case and that, therefore, no amount was includible under section 17(1) in the value of the estate passing. On reference: Held Property has been defined in section 2(15) as including any interest in property, movable or immovable. Therefore, the money lent or invested by the deceased should be taken to come within the expression 'property'. Undisputably, the interest received from the company was a benefit accruing to the deceased from the company as contemplated by rule 5 of the Estate Duty (Controlled Companies) Rules. Once the money had been…

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