CONTROLLER OF ESTATE DUTY GUJARAT R RANGANAYAKI AMMAL Vs. KANTILAL TRIKAMLAL:THE CONTROLLER OF ESTATE DUTY MADRAS

JUDGEMENT

(1.) It is permissible for judges to speculate on the philosophical edge of a human problem hidden by the litigative screen before setting down to examine its forensic facet If it is, we may make an observation about the question posed in this case without pejorative implications. For many men in advancing age arrives a stage in life when 'to be or not to be' stampedes them into doing things dubious before God and evasive before Caesar - and we have a hunch both the appeals before us smack of such a disposition as well be evident when the narration of facts and discussion of law unfold the story.

(2.) A brief statement of the circumstances leading to the single critical legal issue, proliferation into a plurality of points, may now be made. We begin with the facts in the Gujarat Appeal (Kantilal Trikamlal, (1969) 74 ITR 353 (Guj)) since the Madras Appeal (Ranganayaki Ammal:(1973) 88 ITR 96 (Mad)) raises virtually the same question, is plainer on the facts and may conveniently be narrated immediately after. To appreciate the complex of facts we choose to enunciate the principal proposition of law canvassed before us by the Revenue in the two appeals. Does a relinquishment by a decedent of a slice of a share on a partition of joint property in such manner that he takes less than his due effected within two years of his death with a view to relieve himself of a part of his wealth and pro tanto to benefit the accountable person, a near relation, have to suffer estate duty under the Estate Duty Act, 1953 (for brevity, the Act)

(3.) One Trikamlal Vadilal (hereinafter referred to as the deceased) and his son Kantilal (referred to later as the accountable person) constituted a Hindu undivided family. They continued as members of a joint and undivided Hindu family until November 16, 1953 when an instrument styled 'release deed' was executed by and between the deceased and Kantilal. Considerable controversy between the parties turns on the interpretation of this instrument and it will therefore be necessary for us to refer to its terms briefly later. Suffice it to state for the present that, under this instrument a sum of rupees one lakh out of the joint family properties was taken by the deceased in lieu of his share in the joint family properties and he relinquished his interest in the remaining properties of the joint family which were declared to belong to Kantilal as his sole and absolute properties and Kantilal also, in his turn relinquished his interest in the amount of rupees one lakh given to the deceased and declared that the deceased was the sole and absolute owner of the said amount. Within two years from the date of this instrument, on June 3, 1955 the deceased died and on his death the question arose as to what was the estate duty chargeable on his estate. Kantilal, who is the accountable person before us, filed a return showing the status of the deceased as individual and the principal value of the estate as Rs. 1, 06, 724. The Assistant Controller was, however, of the view that the instrument dated November 16, 1953 operated as relinquishment by the deceased of his interest in the joint properties in favour of Kantilal and that the consideration of rupees one lakh for the one-half share of the deceased in the joint family properties at the date of the said instrument was Rs. 3,44,058 and there was, therefore, a disposition by the deceased in favour of a relative for partial consideration and it was, accordingly, by reason ofSection 27, sub-section (1), liable to be treated as a gift for the purpose of Section 9, sub-section (1), and its value, viz., Rs. 3,44,058 after deducting Rupees 1,06,724 (being the amount received by the deceased together with interest) was includible in the principal value of the estate of the deceased. The Assistant Controller, accordingly, included a sum of Rupees 2,27,334/- being the difference between Rs. 3,44,058/- and Rs. 1, 06, 724/- in the principal value of the estate of the deceased.