1979 (5) TMI 71 - AT - Income Tax

Tribunal rules properties of deceased not ancestral, belong to Hindu Undivided Family.

The Tribunal dismissed the appeal, affirming that the properties belonged to the Hindu Undivided Family (HUF) of the deceased, and only half of the ... - Issues:1. Determination of ownership of properties for estate duty assessment.2. Whether properties acquired by deceased from father were ancestral properties.3. Impression of properties with joint family character by deceased.4. Application of Explanation 2 to Section 2(15) of the Estate Duty Act.5. Interpretation of Section 10 of the Estate Duty Act.Analysis:Issue 1: Determination of ownership of properties for estate duty assessmentThe deceased owned immovable properties which were subject to assessment for estate duty. The Assistant Controller of Estate Duty initially determined that the properties belonged exclusively to the deceased based on their acquisition history and partition deed. The accountable person contended that the properties were ancestral and belonged to the Hindu Undivided Family (HUF) of which the deceased was the Karta. The Appellate Controller held that only a half share of the properties passed on the deceased's death under Section 7 of the Estate Duty Act. The department appealed this decision.Issue 2: Ancestral nature of properties acquired from fatherThe accountable person argued that properties acquired from the deceased's father were ancestral in nature. However, based on legal precedents and the absence of specific provisions in the will designating the properties as ancestral, the Tribunal determined that the deceased held these properties as his individual assets. Therefore, the properties were not considered ancestral and were deemed to belong exclusively to the deceased.Issue 3: Impression of properties with joint family characterThe Department contended that the deceased had impressed the properties with joint family character, leading to a disposition under Explanation 2 to Section 2(15) of the Estate Duty Act. The Tribunal disagreed, citing the deceased's consistent reporting of income from the properties as belonging to the HUF. This consistent treatment indicated an intention to throw the properties into the family hotchpot, thereby establishing joint family character.Issue 4: Application of Explanation 2 to Section 2(15) of the Estate Duty ActThe Department argued that the impression of joint family character amounted to a disposition under Explanation 2 to Section 2(15), triggering the application of Section 10 of the Act. However, the Tribunal relied on legal precedents to determine that the transaction did not result in an extinguishment of the deceased's rights, and therefore, Section 10 was not applicable.Issue 5: Interpretation of Section 10 of the Estate Duty ActThe Tribunal concluded that the provisions of Section 10 did not apply to the transaction where the deceased impressed the properties with joint family character. The nature of the transaction indicated that the deceased retained ownership and control over the properties, precluding the application of Section 10. Therefore, the Tribunal upheld the decision that only half of the properties passed on the deceased's death.In conclusion, the Tribunal dismissed the appeal, affirming that the properties in question belonged to the HUF of the deceased, and only half of the deceased's share passed on his death.