Estate duty cannot include estimated undisclosed profits unless the asset is shown to exist at death.

Undisclosed profits assessed in the firm's earlier income-tax proceedings could not be included in the deceased partner's estate for estate duty unless the revenue proved that the asset or corresponding property existed on the date of death. Because the additions were only estimated profits spread over prior years and there was no material showing cash, investment, or other property in the deceased's hands at death, no presumption arose that the secret profits continued to exist. The Tribunal's exclusion of the amount from the principal value of the estate was upheld in favour of the assessee.

---

---

Issues: Whether the deceased partner's alleged share in the firm's undisclosed profits, assessed in the income-tax proceedings for earlier years, could be included in the principal value of the estate for estate duty purposes.

Analysis: The undisclosed profits were assessed in the firm's income-tax proceedings for a series of prior years and were only estimated additions spread over time. There was no material to show that the amount or any corresponding asset continued to exist on the date of death as cash, investment, or other property in the deceased's hands. In estate duty matters, the revenue must establish that the asset existed at the time of death before it can be treated as property passing on death. A prior settlement or assessment of undisclosed income does not by itself prove continued existence of the asset on the valuation date, and no presumption arises that secret profits necessarily remained available after lapse of time.

Conclusion: The amount was not includible in the principal value of the estate, and the exclusion made by the Tribunal was upheld, in favour of the assessee.

---