1983 (11) TMI 13

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....? " One Sri M. A. Ramanujam Pillai was running a rice mill in his individual capacity. In 1956-57, a sum of Rs. 85,000 was gifted by way of transfer to the debit of capital account of the deceased and to the credit of the account of his sons, wife, daughter and grandsons. Thereafter, the donees were taken in as partners and the credit balances in their favour were credited to their capital account. The said Ramanujam Pillai died on October 16, 1969. In the course of the assessment proceedings under the E.D. Act, the Asst. CED held that since the possession and enjoyment of the funds gifted had not been retained by the donees to the entire exclusion of the deceased or of any benefit to him, s. 10 should be applied. He, therefore, added th....

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....ugh the deceased had the benefit of the gifted amounts, the benefit should be traced to his capacity as a partner and not to his capacity as a donor and that, therefore, since the benefit is not referable in any way to the gift and is, in fact, unconnected with the gift, s. 10 of the E.D. Act cannot be applied. In support of that view, the Tribunal relied on the decision of the Supreme Court in CED v. Ramachandra Gounder [1973] 88 ITR 448. Aggrieved by the decision of the Tribunal, the Revenue has sought and obtained the reference on the question set out above. The learned counsel for the Revenue refers to the decision of this court in CED v. Suryanarayanan [1978] 114 ITR 599 (Mad) and submits that the said decision will apply on all fou....