Law:

Section:

Section 46 of the Estate Duty Act, 1953 - Debts and encumbrances - Before his death on 15-10-1976, deceased had settled/gifted certain agricultural lands to his two grandsons and two grand-daughters in year 1958 - Accountable person claimed deductions on account of (a) debts due to two grandsons of deceased, and (b ) repayments of debts made by deceased to two grand-daughters within two years of his death - Whether in view of facts that amounts lent by grandsons to deceased were larger than income from settled properties and in absence of evidence that gifting of property by deceased constituted consideration for debts advanced by two granddaughters to him, debts due to two grandsons and repayments of debts made by deceased to two grand-daughters could not be deemed to have abated either under sub-section (1) orsub-section (2) of section 46 - Held, yes Facts The deceased had settled/gifted certain agricultural lands in the year 1958 to his two grandsons and two grand-daughters who took possession of the same on the date of the gift itself. Subsequently, on 15-6-1960, a family partition took place in which both the grandsons obtained substantial properties besides money-lending dues and capital. The said partition was put forward in the income-tax assessment proceedings and was accepted and recorded. Deceased died on 15-10-1976. The accountable person claimed deduction on account of (a) the debts due to two grandsons of the deceased, and (6) repayments of the debts made by the deceased to two grand-daughters within the period of two years preceding the date of death. The Assistant Controller rejected the claim on the ground that the debts must be deemed to have abated under section 46 and included the total value of the said debts in the estate of the deceased. To the debts due to the two grandsons, he applied sub-section (1) of section 46 and to the debts repaid to the grand-daughters within two years of the death of the deceased, he applied sub-section (2) of section 46. On appeal, the Appellate Controller found (i) that there was no income from these gifted properties during the years 1958-59 and 1959-60 and that they started yielding income only from the…

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