LexCONTROLLER OF ESTATE DUTY, MADRAS versus PARVATHI AMMAL
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
A II c D E F G H CONTROLLER OF ESTATE DUTY, MADRAS v. PARV ATill AMMAL November 11;1974 [H. R. KHANNA, A. C. GUPTA, JJ.] Estate Duty Act (34 of 1953) s. 10-Scope of. A gift of immovable property under s. 10 of the Estate Duty Act, 1953, will be dutiable unless the donee assumes immediate exclusive and bona fide posses- sion and enjoyment of the subj'ect-matter of the gift, and there is no beneficial. mterest reserved to the donor by contract or otherwise, that is, ( 1) the donee must hav~ bona fide assume~ possession and. enjoyment of the propef!Y which is the subiect matter of the gift to the exclusion of the donor, 1mmed1ately upon the gift, and (2) the donee must have retained such possession and enjoyment of the property to the entire exclusion of the donor or of any benefit to him by contract or otherwise. The two conditions are uncumulative and unless each of these condi- tions is satisfied the property would be liable to estate duty. The second part of the sectipn has two limbs, namely, that the deceased must be entirely excluded (a) from the property, and_ (b) from any benefit by contract or otherwise. The word 'otherwise' should be construed ejusdem generis and should be interpreted to mean some kind of legal obligation or some transaction enforceable at law or in equity which, though not in the form of contract may confer a benefit on the donor. The ·Words 'by contract or otherwise' .however, do not control the words 'to the entire exclusion of the donor'. In order to attract the section, consequen- tly, it is not necessary that the possession of the donor of·the gifted propCrt.y must be referable to some contractual or other arrangement enforceable at law or in equity. Even if the donor is content to rely upon the mere filial affection 'of his sons with a view to enable him to continue to reside in the house, wllere the sub~ ject matter of gift is a house, it cannot be said that he was 'entirely excluded from pcssession and enjoyment' within the meaning of the first limb of the section and, therefore, the property will be deemed to pass on the death 10 the donor and. will be subject to levy of e->tate duty. [691C-692A] In the present case, the deceased owned two ·buildings and some agricultural I and. He was carrying on the business of boarding and lodging in one of. the buildings. In March, 1955, he executed a document, described as a partition deed, whereby he gave possession of that building to his sons and retained for himself the other house and agricultural land. In June, 1955 he entered into an agree- ment with his sons by which they leased to their father their house, wherein, as before, he continued to carry on his business of boarding and lodging. The rent fixed however was not paid in cash but only entries in books were made. The deceased died on April 6, 1~57. The Assistant Controller under the Act held that the house in which the busitia&& was carried on was liable to be taken into account for asse<sing the estate 11t1iy and included it in the estate of the deceased. On appeal to the Board of Direct Tax1<5 it was· held that the document Of March 1955 was not a partition deed; that the house was gified by the deceased to hlS sons; that the deceased continued to be in undisputed possession of the building, that the donor (deceased) had not been excluded from the enjoyment ·and pos- session of the property; and that therefore, estate duty was payable in respect of that property under s. 10. On reference to the .High Court on the question whe- ther on the facts and in the circumstances of the case the entire value of the build- ing or any portion of its value was liable to be included In. the .estate of the de- <;eased as property deemed to have passed on his death, the High Court proceecled on the assumption that the document was a gift deed, that p<>saesdon and enioy- .ment of the building were not retmned by the. sor.s of the deceaaed, 1llld held that therefore it followed that only tht value of tht right to pouemon and en/O,ment in the hands of the deceased, as a lessee, that would pass on bis.death and would attract duty. · 686 SUPREME COURT REPORTS (1975] 2 S.C.R. In appeal to this Court, A HELD : The entire value of the property was liable to be included in the estate of the deceased as property deemed to have passed on his death. [70!F] (I) Secti<?n 10 would have to be construed for the purpose of this case as it stood befor
Excerpt shown. Read the full judgment & AI analysis in Lexace.