Full Judgment Text
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PETITIONER:
KALYANI SUNDARAM
Vs.
RESPONDENT:
ASSISTANT CONTROLLER OF ESTATEDUTY MADRAS & ANOTHER
DATE OF JUDGMENT12/05/1989
BENCH:
PATHAK, R.S. (CJ)
BENCH:
PATHAK, R.S. (CJ)
RAY, B.C. (J)
CITATION:
1989 AIR 1654 1989 SCR (3) 233
1989 SCC Supl. (1) 635 JT 1989 Supl. 223
1989 SCALE (1)1531
ACT:
Estate Duty Act/Estate Duty Rules, 1958---Sections 17,
19(1), 30(1)(e), 36, 37 & 61/Rule 15--Assessment of Account-
able persons-Made--Entire estate duty paid up--Whether
rectification of assessment permissible.
HEADNOTE:
Shri Anantharamakrishnan, a reputed industrialist died
in Madras on April 18, 1964 intestate leaving behind his
widow, Valli, two sons, Sivasailam and Krishnamoorthy and
two daughters, Kalyani and Seetha. Some time thereafter, his
son Sivasailam, being an accountable person rendered the
Estate Duty account. All other heirs i.e. his mother, broth-
er and sisters, who were also accountable persons, being the
heirs of the deceased wrote to the Assistant Controller of
Estate Duty that as accountable persons they agreed to abide
by the accounts rendered by Sivasailam and whatever explana-
tion is furnished by him would be binding on them.
M/s. Amalgamations Private Ltd. is a company which held
shares in most of the companies including Simpson and Compa-
ny Ltd. in which company the deceased Anantharamakrishnan
too held shares. By a letter of April 27, 1965, Amalgama-
tions informed the assessing authority that the deceased had
transferred property to it in the form of shares and that at
the time of his death, he had controlling interest in the
Company. On September 13, 1965, the Assessing Authority
wrote to Amalgamations that the deceased having transferred
80,377 shares of Simpson, as such Amalgamations was a con-
trolled company within the meaning of s. 17 of the Estate
Duty Act and thus the said company had to be regarded as one
of the accountable persons in respect of the estate of the
deceased. Amalgamations was therefore required to submit an
account of the estate. Accordingly Amalgamations flied a
return and no objection thereto was taken by any of the
heirs.
Treating Amalgamations as a controlled company and in
view of the fact that the deceased had control over its
affairs, the assessing authority valued the shares as per
the provisions of Rule 15 of the Rule framed by
234
the Board under Section 30(1)(e) of the Act. The principal
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value of the shares was determined of Rs.2,12,29,998 and the
duty was computed at Rs.1,67,74,697.58, out of which provi-
sional duty in the sum of Rs.65,50,542.73 had been paid. The
assessment order was addressed both to Amalgamations as also
to Shri Sivasailam as accountable persons. No appeal was
preferred against the said assessment by the accountable
persons.
K.S. Sundaram husband of the appellant as her agent and
constituted power of attorney, on June 11, 1974 wrote to the
Assistant Controller seeking certain clarifications. The
Assistant Controller referring to the agreement between the
heirs of the deceased Anantharamakrishnan that they were
bound by the accounts rendered or explanation given by
Sivasailam, replied that, since all subsequent proceedings
had been completed after discussion with Sivasailam and
Amalgamations, the assessment had become final and that it
was not possible to enter into any further discussion.
On 2nd January, 1975, appellant’s husband as agent filed
an application under Sec. 61 of the Estate Duty Act, and it
was contended by him that the assessment order was vitiated
by several errors inasmuch as Rule 15 only prescribed the
method of valuation of shares and debentures of the con-
trolled company and the rule was appendage to Sections 36 &
37 of the Act. It was urged that the assessment order did
not show any details and therefore a rectification order
should be made indicating the exact amount included under
Section 17(1) of the Act as the property passing on the
death of the deceased. He stated that he required this
information to know the precise amount which his principal
had to pay to Amalgamations, as the assessment order did
not, in terms, indicate apportionment of the duty, for which
reason rectification was required.
On January 25, 1975, the Assistant Controller declared
by an order that he was unable to find any mistake in the
assessment order which called for any rectification and
therefore he declined to act under Sec. 61 of the Act.
Order passed by the Assistant Controller was challenged
in the High Court by means of Writ Petitions. The High Court
dismissed the Writ Petitions holding that there was no error
apparent on the record and therefore there was no reason for
invoking Sec. 61 of the Act. The High Court took the view
that proceedings reflected a private dispute between the
appellant and other members of the family. Hence this appeal
by the appellant.
235
Dismissing the appeal the Court,
HELD: All the heirs other than Sivasailam had agreed
that as accountable persons they would abide by the accounts
rendered by Sivasailam and any information furnished by him
with regard to the estate duty matter would be binding on
them. The appellant cannot be heard now to dispute the
quantum of liability and the basis on which the liability
was computed. Nor is it open to her to contend that it is
not Amalgamations which is liable to pay the duty, but the
duty is payable by the heirs of the deceased. The assessment
had become final and no appeal against it had been attempt-
ed. [239C-D]
The appellant acquiesced wholly and completely in the
assessment to estate duty being made on Amalgamations.
[239E]
The assessment was completed in 1970 and the entire
estate duty has now been paid up. It was only after the
entire estate duty was paid that the appellant filed the
application for rectification on January 2, 1975. [239E-F]
The question whether the assessment was justified on
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Amalgamations or should it have been taken against the heirs
of the deceased stands concluded now and upon all the facts
and circumstances of the case it was not permissible for the
appellant to have recourse to Sec. 61 of the Act in order to
re-open the case, as there was no mistake apparent on the
record. [240D-E]
That this litigation was woven around a private dispute
among the family members. [239G]
Hari Vishnu Kamath v. Syed Ahmed Ishaque and Others,
[1955] 1 SCR 1104, 1123; Hind Trading Company v. Union of
India & Anr., [1969] 2 SCR 533; M.K. Venkatachalam, Income-
tax Officer and Another v. Bombay Dyeing and Manufacturing
Co. Ltd., [1958] 34 ITR 143, 149-50; Commissioner of
Income-tax, Madras v. Mr. P. Firm Muar, [1965] 1 SCR 815,822
and Thungabhadra Industries Ltd. v. The Government of Andhra
Pradesh, [1964] 5 SCR 174, 180, referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 23 19-
2320 of 1981.
From the Judgment and Order dated 14.3.1980 of the
Madras High Court in Writ Petition Nos. 4959 and 4960 of
1975.
236
Soli J, Sorabjee, Harish N. Salve, S. Ganesh, Mahapa-
tra, P.S. Shroff and Mrs. P.S. Shroff for the Appellant.
N.A. Palkhiwala, Gauri Shanker, S.C. Manchanda, J.B.
Dadachanji, Mrs. A.K. Verma, D.N. Mishra, M.S. Harau, Ram
Chandran, Mrs. J. Ramachandran Ms. A. Subhashini and C.V.
Subba Rao for the Respondents.
The Judgment of the Court was delivered by
PATHAK, CJ. These appeals by special leave are directed
against the judgment and order of the High Court of Madras
dismissing the writ petitions filed by the appellant against
the refusal of the first respondent to rectify an assess-
ment order and pass consequential directions.
Shri Anantharamakrishnan, a reputed industrialist in Tamil
Nadu, died in the state in Madras on 18 April, 1964. He left
behind his widow, Valli, his two sons, Sivasailam and Krish-
namoorthy and two daughters, Kalyani and Seetha. Some time
after his death, Sivasailam, as an accountable person ren-
dered the estate duty account. All the heirs, other than Sri
Sivasailam, who were also accountable persons wrote to the
Assistant Controller of Estate Duty on 15 December, 1964
that as accountable persons they agreed to abide by the
accounts , rendered by Sri Sivasailam and any explanation
furnished by him with regard to the Estate Duty case would
be binding on them. Messrs. Amalgamations Private Ltd.
(shortly referred to as ’Amalgamations’) is a company which
holds shares in most of the companies including Simpson and
Company Ltd. (shortly referred to as ’Simpson’) of the
group. By letter dated 27 April, 1965 Amalgamations informed
the assessing authority that the deceased had transferred
property in the form of shares in Simpson to it and that the
deceased had controlling interest in that company at the
time of his death. On 13 September, 1965 the assessing
authority wrote to Amalgamations that the deceased had
transferred 80,377 shares of Simpson, and therefore Amalga-
mations was a controlled company within the meaning of s. 17
of the Estate Duty Act. By virtue of s. 19(1) of the Estate
Duty Act the controlled company had to be regarded as one of
the persons accountable for the estate of the deceased.
Amalgamations was required to submit an account of the
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estate. Amalgamations filed a return before the Assistant
Controller. No objection was raised by the heirs of the
deceased or by Amalgama-
237
tions to the latter being treated as an accountable person.
After due enquiry the assessment of Estate Duty was
completed on 27 January, 1970 and the duty payable by the
estate was determined at Rs. 1,67,74,697.58, of which provi-
sional duty had been paid in the amount of Rs.65,50,452.73
leaving a balance of Rs.1,02,24,244.85. The assessment order
was addressed to Amalgamations as well as Sri Sivasailam as
accountable persons. The Assistant Controller of Estate Duty
proceeded on the basis that Amalgamations was a "controlled
company" and the deceased had control over its affairs, and
therefore valuation of the shares held by the deceased in
the company had to be made in the manner laid down in Rule
15 framed by the Board under s. 30(1)(e) of the Estate Duty
Act. The principal value of the assets was determined at
Rs.2,12,29,998 and the duty was computed at Rs.
1,67,74,697.58. There was no appeal against the assessment
by any of the accountable persons.
Kalyani Sundaram, one of the daughters of the deceased
and the appellant before us, became entitled to the death of
Anantharamakrishnan to a fifth share in his estate under the
Hindu Succession Act. Her husband, K.S. Sundaram, as her
agent constituted by power of attorney, wrote on 11 June,
1974 to the Assistant Controller seeking certain clarifica-
tions regarding the assessment. The Assistant Controller
replied on 25 June, 1974 referring to the specific agreement
of the accountable persons to abide by the accounts rendered
by Sri Sivasailam and to be bound by any explanation given
by him. The Assistant Controller referred to the fact that
all subsequent proceedings had been completed after discus-
sion with Sri Sivasailam and Amalgamations and as the as-
sessment had now become final it was not possible to enter
into any discussion concerning it.
On 2 January, 1975 the appellant’s husband as agent
filed an application under s. 61 of the Estate Duty Act
contending that the assessment order was vitiated by several
errors inasmuch as Rule 15 prescribed only the method of
valuation of the shares and debentures of the controlled
company and the Rule was an appendage to ss. 36 & 37 of the
Act, that unless property was transferred without considera-
tion by the deceased to Amalgamations and some benefit
accrued to the deceased from the company s. 17(1) of the Act
would not be attracted, that the decision to treat Amalgama-
tions as an accountable person because of the transfer of
shares rested on the transfer of shares made by the de-
ceased, that on a number of aspects of the case the assess-
ment order did not show any detail, and therefore a rectifi-
cation
238
order should be made indicating the exact amount included
under s. 17(1) of the Act as the property passing on the
death of the deceased. He required this information, he
said, to enable him to work out the amount which his princi-
pal had to pay to Amalgamations by way of reimbursement of
the duty. If the apportionment of the duty had been effected
by the order itself, he said, the need for rectification
would not have arisen.
Section 61 empowers the Controller "to rectify any
mistake apparent from the record" at any time within five
years from the date of the order passed by him. On 25 Janu-
ary, 1975 the Assistant Controller passed an Order declaring
that he was unable to discover any mistake which called for
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rectification in the assessment order and therefore he
declined to act under s. 61 of the Act. This order was
challenged by the writ petitions out of which the present
appeals arise.
The High Court dismissed the writ petitions. Sethuraman,
J. held that there was no apparent error, and therefore no
reason for invoking s. 61 of the Act and Balasubramanyan, J.
in a concurring judgment, held likewise and also dealt with
other aspects of the case. BOth learned Judges were of the
view that the proceeding reflected a private dispute between
the appellant and other members of the family, and that the
forum and remedy selected by the appellant were not appro-
priate for that purpose.
The fundamental question in these appeals is whether the
appellant is right in invoking s. 61 of the Act.
Learned counsel for the appellant contends that the
heirs of the deceased on whom the estate devolves are liable
to pay estate duty attributable to the property which falls
to their respective shares and that if an accountable person
pays any part of the estate duty in respect of any property
not passing to him he is entitled to reimbursement by the
person entitled to such property. This, says learned coun-
sel, has no application in respect of the duty payable by
virtue of s. 17 of the Act, which provides that the slice of
the assets of a controlled company shall be deemed to pass
on the death of the deceased for the purposes of estate duty
and the slice will be included in the property passing on
his death if the deceased made a transfer of that property
to the controlled company and benefit accrued to the de-
ceased in the three years ending his death. The slice of the
assets of the controlled company does not come to any heir;
therefore no heir is called upon to pay the amount of estate
duty attributable to the inclusion of that slice
239
in the chargeable estate. By s. 19 the controlled company
itself is liable to pay the corresponding amount of estate
duty. In the present case, however, learned counsel urges,
no slice of the assets of Amalgamations has been included in
the estate of the deceased by the assessing authority as
property deemed to pass on the death of the deceased and
therefore the demand issued to the controlled company con-
stitutes a mistake apparent from the record. The application
of Rule 15 is also contested and this, according to learned
counsel, is a clear mistake committed by the Controller. It
is urged that there is a mistake apparent from the record in
the directions requiring Amalgamations to pay the entire
amount of estate duty.
It seems to us that all the heirs other than Sivasailam
had agreed that as accountable persons they would abide by
the accounts rendered by Sivasailam, and any information
furnished by him with regard to the estate duty matter would
be binding on them. The appellant cannot be heard now to
dispute the quantum of liability and the basis on which the
liability was computed. Nor is it open to her to contend
that it is not Amalgamations which is liable to pay the
duty, but the duty is payable by the heirs of the deceased.
The assessment has become final and no appeal against it has
been attempted. It was for the benefit of the heirs that
there was general agreement to have the assessment made on
Amalgamations and indeed when the assessment was completed
and finalised, no objection was taken. The appellant acqui-
esced wholly and completely in the assessment to estate duty
being made on Amalgamations. No separate assessment was made
on the appellant nor on the other heirs. The assessment was
completed in 1970 and the entire estate duty has now been
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paid up. It was only after the entire estate duty was paid
that the appellant filed the application for rectification
on 2 January, 1975.
It was contended by learned counsel for the private
respondents that the appellant enjoyed no locus standi in
order to maintain the application under s. 61 and these
appeals thereafter, but we do not propose to enter into this
question.
Further, it appears that this litigation is woven around
a private dispute among the family members. That is hardly
any justification for invoking s. 61 of the Act.
We have carefully perused the reasons given individually
by the two learned Judges of the High Court and we are in
complete agreement with them that there is no mistake appar-
ent on the record.
240
In support of the contention that there was a mistake
apparent on the record, learned counsel has referred us to
Hari Vishnu Kamath v. Syed Ahmed Ishaque and Others, [1955]
1 S.C.R. 1104, 1123; Hind Trading Company v. Union of India
& Anr., [1969] 2 SCR 533; M.K. Venkatachalam, Income-Tax
Officer and Another v. Bombay Dyeing and Manufacturing Co.
Ltd., [1958] 34 ITR 143, 149-50 and Commissioner of Income-
Tax, Madras v. Mr. P. Firm, Muar, [1965] 1 S.C.R. 8 15,822
but having regard to the facts of the case before us we do
not find anything in those cases which can be of assistance
to the appellant.
Learned counsel for the appellant states that having
regard to the terms of the order granting special leave to
appeal the appellant is justified in requesting the court to
consider the issues on the merits. We are unable to spell
out such intent of the Court from the terms of the order
granting special leave to appeal. We do not think that the
observations of the Court in Thungabhadra Industries Ltd. v.
The Government of Andhra Pradesh, [1964] 5 S.C.R. 174, 180
affect the position before us.
The real question is whether the assessment was justi-
fied on Amalgamations or should it have been taken against
the heirs of the deceased. In our opinion, that question
stands concluded now and upon all the facts and circum-
stances of the case we do not think it permissible for the
appellant to have recourse to s. 61 of the Act in order to
re-open the case.
The appeals are dismissed, there is no order as to costs.
Y.L. Appeals dis-
missed.
241