LexGEORGE DA COSTA versus CONTROLLER OF ESTATE DUTY IN MYSORE, BANGALORE
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
GEORGE DA COSTA
v.
CONTROLLER OF ESTATE DUTY IN MYSORE,
BANGALORE
October 28, I 966
(J. C. SHAH, V. RAMASWAMI AND V. BHARGAVA. J.l.J
Es/Ille /July Act, 1953 (Act 34 of 1953), s. !(}-Donor continuing to
reside i11 house after making gift of it to his sons-R·!Sidence based only
oli filial affection-Donor whet~er 'entirely excluded from possession a11d
B
enjoynzent' within meaning of sectio11-'By contract or otherwise', mean{ng
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The apr.ellant's fa1her purchased a house in the joint names of himselt
and his wife.
In 1954 the parents made a gift of the said property to
their two sons including the appellant.
The document recited that tho
donees had accepted the gift and they had been put in possession. There-
afler, the sons paid the municipal tax but the parents continued to reside
in the house and the father continued to look after its affairs as head of
the family. The father died in 1959, more than four years after the gift
and the question arose in &late Duty proceedings whether the said house
was to be included in the estate of the deceased fOI" the purpose of the duty
or not.
The Assistant Controller of &tale Duty and the Central Board
of Revenue decided against the appellant (who was the accountable per-
son) and thereafter a reference was made to the High Court. That Court
also having
given an adverse verdict, the appellant came to this Court.
It was contended on bis behalf that the deceased had no enforceable right
against his sons and therefore s.
10 of the Estate Duty Act was not
attracted 10 the case.
HELD : The crux of s. 10 lies in two parts : (l) lhe donee must
bona fide have assumed possession and enjoyment of the property which
is the subject-matter of tho gift to the exclusion of the donor, immedia-
tely 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 any
benefit to him by contract or otherwise. Both these conditions are cumula-
tive.
Unless each of Athem is satisfied the property would be liable to
estate duty und"r s. Iv of the Act.
(1007 OJ
Attorney-General v. Earl Grey, [18981 2 Q.B.D. 534, relied on.
(ii) The second part of s. 10 has two limbs : the deceased must be
entirely excluded (i) from the property and (ii)
from any benefit by
contract or otherwjse.
The word •otherwise· must be construed ejusd~m
gencris and must be interpreted to mean some kind of legal obligation or
•ome 1ransaction enforceable at law or equity which though not in the
form of a contract may confer a benefit oil the owner. (1008 BJ
But the words by con.tract or otherwise in the second limb of the
section will not control the words 'to the exclusion of the donor' in the
first limb. In other words to atlract the section it is not necessary that the
p05sessioo of the donor of the gift must be referable lo some contractual
or other arrangement enforceable in 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 it cannot be said
that he w3s 'entirely excluded from possession and enjoyntent' wit!lin the
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GEORGE DA COSTA v. CON.TROLLER (Ramaswami, I.)
1005
meaning·of the.first limb of the section, and therefore the 11roperty will be
deemed to have passed on the death. of the donor and will be subject to
the levy of estate duty. [1008 E-G]
Chick v. Commissioner of Stamp Duties of New South Wales, 1958
A.C. 435 and Commissioner of Stamp Duties of N•w South Wates v.
Owens, 88 C.L.R. 67, relied on.
Attorney-General v. Seccombe, [1911] 2 K.B. 688, referred to.
(iii) The appellant could not take advantage of the amendment made
by the Finance Act, 1965 in s. 10 of the Estate Duty Act, 1963. The said
amendment was effective only from April I, 1965 and was not retros-
pective.
(1010 Fl
(iv) It was the Board's finding that though the property stood. in the
joint names of the deceased and his wife she was only a name-lender and
the e.ntire property belonged to the deceased. In view of this finding it
was not possible to accept the argument of the appellant that only half
share of the property should be taken for the
purpose of estate duty
assistant. (1011 BJ
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1098 of 1965
Appeal by special leave from the judgment and
order
dated November 17, 1964 of the Mysore High CoExcerpt shown. Read the full judgment & AI analysis in Lexace.