Estate duty rectification and deemed gift rules apply to share sales to relatives below fair consideration.

Rectification under the Estate Duty Act is permitted where the assessment record shows an apparent mistake in valuation or omission of property, and the concept of mistake is not limited to clerical or arithmetical errors. A sale of shares to relatives may also fall within the statutory deeming provisions as a disposition for less than full consideration, so that the unpaid element is treated as property deemed to pass on death unless the accountable person rebuts the presumption of bounty by proving fair consideration. On the stated facts, both the rectification and the inclusion of the share value were upheld.

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Issues: (i) whether rectification of the original estate duty assessment under section 62 of the Estate Duty Act, 1953 was valid; (ii) whether the sum added to the estate on account of the sale of shares to relatives was liable to be included as property deemed to pass on death under sections 9 and 27 of the Act.

Issue (i): whether rectification of the original estate duty assessment under section 62 of the Estate Duty Act, 1953 was valid.

Analysis: Section 62 empowers rectification where there is a mistake apparent from the record, a mistake in valuation, or omission of property, subject to approval and limitation. The concept of mistake under the provision is not confined to clerical or arithmetical errors; it extends to an obvious or discernible error revealed on a fair scrutiny of the assessment record. The power is meant to bring the assessment into conformity with the law where property has been omitted or incorrectly valued, and it is not defeated merely because some examination of the record is needed.

Conclusion: The rectification was valid in law and is upheld against the assessee.

Issue (ii): whether the sum added to the estate on account of the sale of shares to relatives was liable to be included as property deemed to pass on death under sections 9 and 27 of the Act.

Analysis: A disposition to relatives within the meaning of section 27 is not confined to a settlement and includes a sale. Where such a disposition is for less than full consideration in money or money's worth, the statutory presumption operates and the transaction is treated as a gift for the purposes of section 9, subject to deduction for any partial consideration. The burden lay on the accountable person to rebut the presumption by showing full and fair consideration. On the facts, the consideration was found to be below the fair value and no satisfactory rebuttal was established; the transaction therefore bore an element of bounty and fell within the charging fiction.

Conclusion: The inclusion of the amount as property deemed to pass on death was lawful and is upheld against the assessee.

Final Conclusion: The estate duty assessment was correctly rectified and the disputed value of the shares was properly brought to tax as deemed to pass on death, so the assessee failed on both referred questions.

Ratio Decidendi: For the purposes of estate duty, rectification is permissible where the assessment record discloses an apparent mistake in valuation or omission of property, and a sale to a relative for less than full consideration may be treated as a deemed gift under sections 9 and 27 if the accountable person fails to rebut the statutory presumption of bounty.

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