Nalini V. Shetty vs Controller of Estate Duty

R. Jayasimha Babu, J.—The Tribunal, after having held that the material on record does not show anything to connect the amount derived

by the deceased''s wife by way of gift, with the subsequent loan advanced by her--the gift of Rs. 30,000 having been made in the year 1960 and

the loan of Rs. 1,09,423 having been advanced to the deceased five years later--the Tribunal has nevertheless proceeded to hold that Section 46

of the Estate Duty Act, 1953, was attracted and, therefore, part of the debt outstanding may not be regarded as having abated to the extent of the

amount that had been gifted in 1960.

Section 46(1)(b) refers to the amount received by the deceased from the person to whom loans were outstanding at the time of the death of the

deceased, ""being part of the resources of that creditor"". Such resource should have been available for being utilised towards the amount of the loan

given to the deceased. There was no material whatsoever before the authorities to show that the amount of the gift had remained with the wife and

that the amount that was lent five years later to the husband included the amount that had been received as gift five years earlier. It is not enough to

merely hold, as the Tribunal has done, that the use of the words ""at any time"" in the section would permit setting off the amount of the gift, whatever

be the distance of time between the date of the gift and the date of the loan. It should be established further that the amount of the gift was part of

the resources from which the loan was subsequently given. Such proof was absent in this case.

Learned counsel referred to a number of decisions of this court to show that there should have been nexus between the resources and the loan.

That proposition is practically self-evident. We, therefore, answer the question referred to us regarding the correctness of the Tribunal''s holding

that Section 46 is attracted to the gift of Rs. 30,000 in favour of the assessee.

So far as the question regarding the holding of the Tribunal that the estate duty payable was not liable for deduction in computing the dutiable

estate, that question must necessarily be answered, in the light of the declaration by the Supreme Court in the case of Nawab Mir Barkat Ali Khan

Bahadur Vs. Controller of Estate Duty, , in favour of the Revenue and against the assessee.