AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
1976 (3) TMI 22
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....his and standing benami in the name of his wife, came to the conclusion that these assets were purchased by the deceased benami in the name of his wife and that they actually belonged to the deceased. Alternatively, the Assistant Controller also held that even if it were to be assumed that the deceased had gifted them to his wife, the subsequent conduct of the deceased in dealing with these assets in his books of account, possessing and enjoying the income therefrom, as if they were his own, clearly attracted the provisions of section 10 of the Estate Duty Act. Accordingly, he included these assets in the principal value of the estate of the deceased passing on the death. The deceased was a partner in a rice-mill for a number of years. On the ground that the running of a rice-mill required various licences and that the partnership firm was not only hulling paddy for others but also purchasing paddy and converting them into rice and selling the same, the Assistant Controller found that the rice-mill business had acquired goodwill and he proceeded to estimate the value of the goodwill. Rejecting the contention of the assessee that the goodwill, if it is to be taken into account, is ....
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.... means, it is the benamidar who will come under section 6, and not the real owner. In that view, the Tribunal directed the deletion of the value of these assets from the estate of the deceased. On the question of goodwill, the Tribunal considered that, having regard to the fact that the rice-mill had no quota right or any peculiar features of its own, it did not have any goodwill at all and that, therefore, there was no justification for adding the sum of Rs. 9,410 on account of goodwill. The revenue asked for a reference of three questions : one relating to the goodwill, the other relating to the includibility of the assets held by the deceased benami in the name of his wife and the third, the applicability of section 10. But the Tribunal considered that the following question is the only question that could be referred. That question reads as follows : "Whether the value of the properties admittedly standing in the name of the deceased's wife could be included in the principal value of the estate assessable under the provisions of the Estate Duty Act ?" That is the subject-matter of reference in T. C. No. 272 of 1970. On an application filed by the revenue under section 64(....
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....roperty for the benefit of the person paying the consideration unless the person paying the consideration intended to pay or provide such consideration for the benefit of the transferee. The finding in this case being one of benami, we are relieved of the duty to find the intention of the person paying the consideration. The accountable person, therefore, must be deemed to hold the property for the benefit of her husband. That means that the real ownership to the properties is vested in the deceased. Section 41 of the Transfer of Property Act deals with transfer by the ostensible owner. In the case of a benami transaction, the ostensible owner is the benamidar. That section provides that where the ostensible owner transfers the property for consideration, the transfer shall not be voidable on the ground that the transferor was not authorised to make it; provided that the transferee, after taking reasonable care to ascertain that the transferor had power to make the transfer, has acted in good faith. Thus, if a person had no actual or constructive notice of the real title and acted in good faith and purchases the property from a benamidar, the real owner cannot recover the same, th....
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....real benamidar, certainly the assets now in question belonged to the deceased who died possessed of the same. Section 5 is, therefore, clearly attracted, and the entire value of these assets is includible in the principal value of the estate of the deceased passing on the death. It now only remains to consider the decisions relied on by the Tribunal and some of the other decisions cited at the Bar. In Smt. Shantabai Jadhav v. Controller of Estate Duty [1964] 51 ITR (ED) 1 (AP), the accountable person who was the wife of the deceased, claimed certain jewellery left by the deceased as hers, and did not include the same in the account of the estate filed by her. The Assistant Controller, in the opinion that the accountable person had failed to establish that the consideration for the purchase of the jewellery came out of her stridhana property and that she had no ostensible resources for purchase of the same, treated the property as that of the deceased. When it came on a reference the Andhra Pradesh High Court observed-See [1964] 51 ITR (ED) 1, 3 (AP): "Even assuming that the money for the purchase was found by her husband, it does not mean that he had beneficial interest in the p....
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.... transactions, the value of the property could be included in the estate of the real owner under section 5 of the Estate Duty Act. Learned counsel for the revenue brought to our notice a decision of the Punjab High Court in Controller of Estate Duty v. M. L. Manchanda [1974] 93 ITR 173 (Punj) in a case relating to a benamidar dying where the question for consideration was whether the assets held by a benamidar could be included in the estate. A Division Bench of the Punjab High Court relying on the aforementioned two decisions of the Andhra Pradesh High Court and an earlier decision of the Allahabad High Court which was overruled in O. S. Chawla v. Controller of Estate Duty [1973] 90 ITR 68 (All) [FB] held that the property had to be treated as the estate of the benamidar on death. In support of this view, the learned judges also sought to rely on a passage in the decision of the Supreme Court in Sree Meenakshi Mills Ltd. v. Commissioner of Income-tax [1957] 31 ITR 28 (SC). We are of the view that the passage quoted from the decision of the Supreme Court was taken out of context and it, therefore, appeared as if the same supported the view expressed by the learned judges in the de....