Case: Commissioner of Income Tax &amp; Controller of Estate-Duty, Madras Vs. N.R. Ramarathanam &amp; Others

"The deceased Sri N. S. Ramaswami Iyer was a partner in the firm of Messrs. Ennessor and Company. The other partners of the firm consisted of the three sons and the daughter of the deceased. The firm was engaged inand financing business. The firm was registered under Sectiontax Act, 1922.At the end of the accounting yearthe current account of the deceased showed a credit balance of Rs.3, the deceased transferred by adjustment entries a sum of Rs.to the accounts of his daughter and three sons. The balance in the account of the deceased was reduced to Rs.56, the account of the deceased in the firm showed a credit balance of Rs.56 the deceased transferred Rs.again by adjustment entries to his daughter and three sons. Thus the two transfers on56 amount to Rs. 1,29,924. The amounts thus transferred by the deceased to his daughter and sons continued to remain in the partnership business subsequent to the transfers till the death of the deceased and were utilised in the firmsbusiness.The deceased died onThe daughter and the three sons of the deceased, as accountable persons, filed an estate duty return showing the principal value of the estate duty as Rs. 2,81,574. In computing the value of the estate of the deceased the accountable persons did not include the amount of Rs. 1,29,924 which had been transferred by the deceased to their accounts. The Assistant Controller of Estate Duty, however, included this amount in the value of the Estate of the deceased on the following grounds(i) The gifts were made by mere adjustments entries in the books and the partnership did not lose its funds;(ii) These moneys were used in the money lending and financing business, which earned profits;(iii) By retaining the amounts to the business, in which he was a partner, the deceased continued to enjoy the benefit of this capital;(iv) Section 10 of the Estate Duty Act was applicable.The accountable persons preferred an appeal before the Appellate Controller against the order of the Assistant Controller including the sum of Rupees 1,29,924 in the value of the Estate of the deceased. They contended that it cannot be said that the donees, who were partners in the firm, were not having exclusive possession and beneficial enjoyment of their share in the assets of the partnership merely because the deceased was participating in the management of the business of the partnership. It was, therefore, contended that Section 10 of the Estate Duty Act was inapplicable. The Appellate Controller, however, did not accept these contentions and held that the provisions of Section 10 were attracted. He, therefore, confirmed the order of the Assistant Controller.The accountable persons went in further appeal before the Tribunal against the order of the Appellate Controller.

Reasoning: 2. The question of law arising for decision is completely covered by our decision in the Controller of Estate Duty, Madras v. C. R. Ramachandra Gounder, Civil Appeal No. 1391 of 1970 D/= (reported in AIR 1973 SC 1170  ). Mr. Karkhanis, the learned counsel for the Department sought to satisfy us that that decision requires reconsideration. We have not permitted him to reargue the question of law which has already been concluded by our decision. Following that decision we affirm the decision of the High Court and dismiss the appeal with costs.