DIPTI NARAYAN SRIMANI versus CONTROLLER OF ESTATE DUTY, WEST BENGAL

Citation: [1988] SUPP. 1 S.C.R. 269 · Decided: 09-05-1988 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Disposed off

Judgment (excerpt)

DIPTI NARAYAN SRIMANI 
v. 
CONTROLLER OF ESTATE DUTY, WEST BENGAL 
MAY 9, 1988 
[R.S. PATHAK, CJ·AND M.N. VENKATACHALIAH, J.] 
Esta.le Duty Act, 1953-Section 12(1) Requirements of-Section 
· 12(1) does not draw-upon the incidents and implications of "settled 
property" for satisfaction of its requirements-Section 12( 1)-Property 
covered by settlement need not he "settled property" as defined in sec-
tion 2(19)-The incidents of "settled property" defined by sec. 2(19) 
need not be incorporated into· the ingredients 'of sec. 12( 1)-Require-
ments of Section 12(1) will be satisfied if there is settlement as defined 
under 2nd Part of Sec. 2(19) rind if, there is reservation of an int~rest by 
the sett/or in addition. 
-
Estate Duty Act, 1953-Section 2( 19)-Definition of Settled pro-
- perties ·a7zd Settlement-What amounts to settlement is a matter of 
construction of the Deed-All settled property is subject matter of settle-
ment but all subject matter of settlement need not become settled 
property-Settled property must be by way of succession. 
. 
A 
B 
c 
D 
A person dnring his lifetime execnted trnst deeds, dated 21.9.53 
E 
and 4.10.1959 respectively. Under the Deed dated 21.9.1953 that 
person as settlor, transferred upon trnst to himself as trustees four 
items of immovable property. The objects and purposes of the trust 
broadly stated were the conduct of the daily worship of the deity, ca.ry-
ing out of certain charitable acts and making of provisions for the mainte-
nance of the settlor and some other persons. The trustee was required 
F 
after defraying taxes etc. to accumulate 1/4th of the net income to be 
set-apart for purposes of effecting certain additions and alterations to the 
properties; to make over another v.th of the net income to the shebait for 
the conduct of the daily pooja; another I/4th for the charities and the 
remaining I/4th for the personal benefit of the settlor during his lifetime 
and to his heirs thereafter. Later on the share of the settlor was 'changed 
G 
to 5/I6. Under the deed dated 4.IO.I959 the settlor transferred upon 
trust to himself and his son, the appellant in Civil Appeal No. 946 of 
I975, as trustees six other properties, almost for the same purposes and 
kept a fixed share for the benefit of the settlor during his lifetime and 
thereafter to his-heirs. In the proceedings of assessment to Estate Duty 
the question arose whether the trust-deeds attracted and fell within-
H 
269 
A 
B 
c 
D 
E 
F 
G 
H 
270 
SUPREME COURT REPORTS 
[19881 Supp. 1 S.C.R. 
section 12( I) of the Estate Duty Act. The Deputy Controller of Estate 
Duty, the Appellate Controller of Estate Duty· in.the first appeal and the 
Income-tax Appellate Tribunal, Calcutta, in the set'ond appeal held that 
the entire subject matter of the deeds must be held, or deemed, to pass on 
death and the value of the properties should be included in the principal 
value of the Estate passing on death. At the instance of the accountable--
person, a reference was made to the High Court for opinion as to whether 
the properties comprised in both the trust-deeds were dutiable under 
section 12(1) of the Act. The High Court held that properties comprised 
in the deed dated 21.9.1953 were settled property within the meaning of 
section 2(19) and that section 12(1) was attracted. In relation to the 
properties covered by the deed dated 4.10.1959, the High Court held that 
Section 12(1) was not applicable to them as they were not settled proper-
ties. Feeling aggrieved, both the accountable person and the Deputy 
Controller of Estate Duty filed these cross appeals. Dismissing the appeal 
of the accountable person, allowing that of the Revenue, and answering 
the question referred to by the High Court for opinion in the affirmative 
and against the assesee, this Court, 
HELD: The first contention of the accountable persons that the . 
interest in the property corresponding to the benefit retained by the 
settlor was not a subject matter of the disposition at all is essentially a 
matter of construction of the deeds. There is, no doubt, a discernible 
difference between a case of settlement of property with reservation of a 
benefit to the settlor on the one hand and the case where what is settled 
is only a share or interest or part of the property, excluding the part or 
the share corresponding to the benefit that the settlor has chosen to 
retain. There is, indeed, no transfer at all in the latter case. The account-
able

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