SECTION 5A – APPLICATION OF AMENDING ACTS TO ESTATE DUTY
ON AGRICULTURAL LANDS

1514. Extension of certain amending legislations to estate duty in respect of agricultural lands – Sub-sections (2), (2A), (2B) and (2C) and notifications issued under clause (b) of sub-sections (2A), (2B) and (2C)

Amending of other legislation

Applies to estate duty in respect of agricultural lands situate in the territories comprised in

1. The Finance Act, 1954

All the States except those in the States of West Bengal and Jammu and Kashmir
2. The Taxation Laws (Extension to Jammu and Kashmir) Act, 1954

3. The Repealing and Amending Act, 1957

4. The Estate Duty (Amendment) Act, 1958 1

The States of Andhra Pradesh1a , Bihar 2, Gujarat, Haryana3 , Maharashtra, Mysore 1a, Orissa1a , Rajasthan, Tamil Nadu, Uttar Pradesh 4.

5. The Central Boards of Revenue Act, 1963

6. The Finance Act, 1964

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7. The Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1964

8. The Direct Taxes (Amendment) Act, 1964

9. The Finance Act, 1955

10. The Finance (No. 2) Act, 1965

11. The Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1965

12. The Finance Act, 1966

13. The Estate Duty (Amendment) Act, 1982, and

The States of Bihar, Gujarat, Haryana, Himachal Pradesh, Karnataka 5, Madhya Pradesh, Maharashtra, Orissa, Punjab6 , Tamil Nadu, Tripura 5.

14. Estate Duty (Amendment) Act, 1984

The States of Assam, Bihar, Gujarat, Haryana, Himachal Pradesh, Kerala, Madhya Pradesh, Maharashtra, Meghalaya, Orissa, Tamil Nadu, all the Union teritories The States of Andhra Pradesh, Karnataka, Manipur 7
The States of Uttar Pradesh 7a, Rajasthan8
The States of Punjab and Tripura. 9
1515. Discontinuance of levy of estate duty in respect of agricultural lands situated in the States of Andhra Pradesh, Karnataka and Manipur

1. Intimations have been received regarding the Legislatures of the States of Andhra Pradesh, Karnataka and Manipur having passed resolutions under article 252 of the Constitution adopting the proposals with respect to the amendments made to the Estate Duty Act, 1953 by the Estate Duty (Amendment) Act, 1984. A reference is invited in this respect to the provisions of section 5A(2C)(b).

2. The State Legislature of Andhra Pradesh passed a resolution on 5-5-1984 as a result of which the levy of estate duty  in respect of agricultural lands situated in the said State ceased to apply with effect from 6-9-1984. The State Legislature of Karnataka passed the resolution on 21-8-1985, with the result that the levy of estate duty in respect of agricultural lands situated in the said State ceased to apply with effect from 22-12-1985. The State Legislature of Manipur passed the resolution on 23-7-1984 with the result that the levy of estate duty in respect of agricultural lands situated in the said State ceased to apply with effect from 24-11-1984.

Circular : No. 458 [F. No. 134/44/85-TPL], dated 16-6-1986.

1516. Liability to estate duty in respect of property held benami – Whether arise on the death of real owner and not on the death of benamidar

1. The Supreme Court have, in their judgment in the case of CED v. Aloke Mitra [1980] 126 ITR 559, held that the liability to pay estate duty under section 5(1) of the Act arises upon the death of the real owner and not of the benamidar who is merely the ostensible owner. This judgment resolves the controversy on the question as to the liability to estate duty in respect of properties held benami. The Allahabad High Court had in its judgment in the case of O.S. Chawla v. ACED [1973] 90 ITR 68 (FB) held that where property is held benami, it passed on the death of the real owner and is thus liable to estate duty. The view taken by the Andhra Pradesh High Court in Smt. Shantabai Jadhav v. CED [1964] 51 ITR (ED) 1 and Smt. Denabai Boman Shah v. CED [1967] 66 ITR 385, the Punjab and Haryana High Court in CED v. M.L. Manchanda  [1974] 93 ITR 173 and the Allahabad High Court in CED v. T.N. Kochhar [1973] 89 ITR 216 is that since property which stands benami is one which the beneficial owner is not competent to dispose of, such property shall not be deemed to pass on the death of the real owner. The latter view has not been accepted by the Supreme Court.

2. The Supreme Court has held that in the case of benami transactions, the real owner has got the title, though the property is in the name of the benamidar. The real owner can deal with the property without reference to the benamidar. A benamidar has no interest at all in the property standing in his name. The fact that the real owner cannot recover the property sold by the benamidar unless he shows that the purchaser had actual or constructive notice of the real title, does not mean that the benamidar has real title to the property. He is merely an ostensible owner thereof.

3. In view of the foregoing analysis, liability to estate duty in respect of property held benami would arise on the death of the real owner and not on the death of the benamidar.

Circular : No. 364 [F. No. 309/93/81-ED], dated 15-7-1983.

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Category : Income Tax (25160)
Type : Circulars (7511) Notifications/Circulars (30306)

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