G.K. Misra, C.J.
1. The question referred by the Tribunal for the opinion of this Court runs thus :
'Whether in the facts and circumstances of the case, the amount to be deducted under Sec. 50A of the Estate Duty Act, had been correctly determined by the Tribunal at Rs. 3200/- ?.'
2. The relevant facts appearing from the order of reference may be stated in brief. The deceased K. Buchiraju, who died on 5-8-61 had made two gifts of Rs. 40,000/- each to his two grandsons separately on 21-10-57. The deceased deposited Rs. 6400/- as advance gift tax under Section 18 of the Gift Tax Act. The gift tax payable was determined at Rs. 3200/-. At the time of assessment he was given credit to the tune of Rupees 640/- which represents 10 per cent of the amount deposited. The total amount available for gift tax was Rs. 7040. The assessee took a refund of Rs. 3840/-.
Section 50A of the Estate Duty Act makes a provision that where tax has already been paid under the Gift Tax Act in respect of gift of any property which is also included in the estate of the donor as property passing under the Estate Duty Act, the estate duty payable shall be reduced by an amount equal to the amount of gift tax paid in respect of such property under the Gift Tax Act The subject-matter of the aforesaid two gifts was taken into consideration for assessment of estate duty. The question for consideration was as to the amount of gift tax to be allowed as a deduction from the estate duty.
The Assistant Controller and the Appellate Controller held that the sum deductible was Rs. 2560/- and not Rupees 3200/-. The Tribunal took the contrary view. It was of opinion that the assessable gift tax was Rs. 3200/- and that amount should be deducted,
3. The question for consideration Is whether Rs. 2560/- or Rs. 3200/- is to be deducted towards gift tax. This necessitates an examination of Section 18(1) of the Gift Tax Act and Section 50-A of the Estate Duty. Act.
4. Section 18(1) of the Gift Tax Act (as it stood at the relevant time before amendment), so far as material, runs thus :
'18(1). If a person making a taxable gift of the value of not less than Rs. 10,000/- pays into the treasury in the case of a taxable gift made before 16th day of July, 1958, before the 1st day of August 1958, and in the case of any other taxable gift, within 15 days of his making the gift, an amount calculated in the manner specified in Sub-section (2), he shall at the time of assessment under Section 15, be credited, in addition to the amount so paid, for an amount equal to 10 per cent of the amount so paid.' Clearly, the gift tax payable by the assessee was Rs. 3200/-. For his voluntary payment within 15 days of his making the gift he was given a credit and he is not to be penalised. The ten per cent of the amount credited to him would in no circumstances constitute a gift tax.
To take the contrary view would lead to fantastic results. Acceptance of such a view would mean that voluntary payment within 15 days would entail punishment. That is not the provision of the law. Credit is given to the tune of 10 per cent for the good conduct evinced by the assessee.
5. If this construction of Section 18 is accepted, then the question becomes simple and what is to be deducted under Section 50A of the Estate Duty Act is clear. Only the gift tax would be deducted and not the 10 per cent given by way of credit. Section 50A of the Estate Duty Act, already quoted reads as follows :
'50-A. -- Relief from estate duty where gift tax has been paid : Where tax has Been paid under the Gift Tax Act, 1958, in respect of gift of any property and the property is also included in the estate of the donor as property passing under this Act, then, notwithstanding anything contained in this Act, the estate duty payable under this Act shall be reduced by an amount equal to the amount of gift tax paid in respect of any such property under that Act.' The assessee paid a gift tax of Rs. 3200/-, and accordingly from the estate duty payable by him only Rs. 3200/- is to be deducted.
6. In our opinion, the Tribunal took the correct view. We would accordingly answer the question in the affirmative. There will be no order as to costs.
R.N. Misra, J.
7. I agree.