CONTROLLER OF ESTATE DUTY, GUJARAT versus KANTILAL TRIKAMLAL

Citation: [1977] 1 S.C.R. 9 · Decided: 19-07-1976 · Supreme Court of India · Bench: HANS RAJ KHANNA · Disposal: Disposed off

Cited by 3 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

. , 
; 
CONTROLLER OF ESTATE DUTY, GUJARAT 
v. 
KANTILAL TRIKAMLAL 
July 19, 1976 
9 
[H. R. KHANNA, V. R. KRISHNA IYER AND P. K. GOSWAMI, JJ.] 
Estate Duty Act (34 of 1953), ss. 2(15), 5, 9 and 27-Scope of. 
'Other riRhts'. in Explanation 2 to s. 2(15), meaning of . 
f/l/erpretation of statutes-Estate Duty Act and 
other 
taxing stalutes-
Principles. 
Practice-Costs in tax matters when there is conflict among High Courts. 
Section 5 of the Estate Duty Act, 1953, authorises the levy of duty upon 
all property which passes on the death of a person. Section 9 provides that 
property taken under a disposition made by the deceased purporting to operate 
as an immediate gift whether by way of transfer, delivery etc., which shall 
not have been bona fide made two years or more before the death of the 
deceased shall be deemed to pass on the death. Explanation 2 to s. 2(15), 
which defines 'property', provides that the extinguishment at the expense of the 
deceased of a debt or other rights shall be deemed to have been a disposition 
made by the deceased in favour of the person for whose benefit the debt or 
right was extinguished and in relation to such a disposition the 
cxpressior 
'prnperty' shall include the benefit conferred by the extinguishment of a debt 
or right. Section 27 deems all dispositions made by the deceased person in 
favour of his relations as gifts, for the purposes of the Act, \mless such disposition 
was made for full consideration or the deceased was concerned in a fiduciary 
capacity with the. property. 
A member of a joint Hindu family, within two years before his death 
entered into a partition of family properties bona fide, not as a colourable or 
sham transaction, whereby, he received towards his share an allotment substan-
tially lower in value than would be his legal entitlement, with a view to 
relieve himself of a part of .his wealth and pro tdnto to benefit the other member 
of the joint family, who is a relative within the.meaning of the Act. 
HELD : The relative, as the accountable person under the Act, is liable to 
pay estate duty, on the difference between the share that the deceased 
was 
legally entitled to and the share that the deceased 
actuaUy 
took, 
that 
is, 
to the extent of the benefit received by the accountable P'erson. (14 G, 12 A] 
(l) Death duties are imposed on richer estates, the fiscal policy being, (a) 
collection of revenue, and (b) reduction of the quantum of inheritance on a 
progressive basis towards equalisation by diminishing glaring disparities of wealth. 
Therefore, the Act uses words of the widest import, legal fictions and deeming 
devices to rope in all kihds of dealings with property for inadequate or no 
consideration within the sta.tutory proximity of death. If the words, however 
cannot apply to a particular species of property, courts cannot supply words 
to fulfil the unexpressed wishes of the legislature. 
In a taxing 
statute 
one 
has to 1"ok merely at what is clearly said. There is no room for any intendment. 
There is no equity about a tax. (13 DJ 
(2) The definition of 'property' in s. 2(15) has to inform and mlist be read 
A 
B 
c 
D 
E 
F 
G 
along with ss. 9 and 27. It is not a substantive rule of law operative by itself. 
Similarly, the expression 'disposition' in s. 9 must be read with the definition in 
H 
Explanation 2 to s. 2(15) since that is the whole purpose of a 'deeming 
provision' is the shape of a definition. (17 B-C] 
3-1003 SCI/76 
10 
SUPREME COURT REPORTS 
[1977] l S.C.R. 
A 
B 
(3) The definition of 'property' in s. 2(15) is not exhaustive but only 
inclusive and the supplementary operation of Explanation 2 ta,kes in what is 
not conventionally regarded as 'disposition'. The expression "other right" in 
the Explanation is of the widest import and cannot be read ejusdem generis 
with 'debt'. The process of extinguishment of a right and the creation of a 
benefit thereby is statutorily deemed to be a disposition in the nature of a 
transfer. Therefore, the definition of 'disposition' covers the diminution in the 
share taken by one coparcener and augmentation of the share taken by the 
other and impresses the stamp of property on this process by the deeming 
provision. 
(18 F-G; 19 CJ 
c 
(4) The case of Getti Chettiar [(1971) 82 ITR 599) dealt with the expressio1t 
'transfer of property' in s. 2(xxiv) of the Gift Tax Act, 1958. This Court held 
that 'transaction' in s. (xxiv) ( d) must take its rolour from the main clause 

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