CONTROLLER OF ESTATE DUTY Vs. RAGHAVENDRA PURNAIYA

JUDGEMENT

(1.) THIS case arises out of the estate duty proceedings consequent on the death of one Nagaraja Rao Purnaiya (hereinafter referred to as the 'deceased') who died on April 27, 1960. The estate duty return was filed by the legal representatives of the deceased, namely, Raghavendra Rao Purnaiya, Malathi Purnaiya and Kumari Nirmala Bai. In the course of the assessment proceedings, the question relating to the liability of certain amount which had been awarded as compensation by the State Government under the provisions of the Karnataka (Personal and Miscellaneous) Inams Abolition Act, 1954 (hereinafter referred to as "the Inams Abolition Act"), in respect of Yelandur jahgir, arose for consideration. The facts relating to the above question are as follows :

(2.) ACCORDINGLY, Dewan Purnaiya accepted the grant and the jahgir continued to remain in the possession and enjoyment of the descendants in the male line of Dewan Purnaiya. Presumably, because of the existence of some differences amongst the members of the family, certain orders were made from time to time by the Government of Mysore regarding the manner in which the jahgir in question should be enjoyed by the descendsnts of Dewan Purnaiya. Ultimately, when it was felt that it was advisable to make a law in relation to the administration, management and enjoyment of the jahgir, His Highness the Maharaja of Mysore promulgated a law for the aforesaid purpose called "The Yelandur Jahgir Act" (Mysore Act 1 of 1885) (hereinafter referred to as" the Act"). The preamble of the Act reads as follows :

(3.) UNDER the Inams Abolition Act, a certain amount was awarded as compensation and it was distributed amongst the members of the family of Dewan Purnaiya. In the amount which was awarded to the branch of the deceased, the deceased had 4/9ths share. A sum of Rs. 4,91,890 was awarded as compensation to the branch of the deceased. The Asst. Controller, Bangalore, who assessed the estate of the deceased under the provisions of the E.D. Act, 1953 (hereinafter referred to as "the E.D. Act"), treated only 4/9ths share of the amount of compensation that was allotted to the branch of the deceased as passing on the death of the deceased and levied estate duty accordingly. Subsequently, the order of assessment was reopened under s. 59 of the E D. Act. After hearing the accountable persons, the Asst. Controller passed a revised assessment treating the entire amount of compensation which was awarded to the branch of the deceased as passing on the death of the deceased on the ground that the jahgir was an impartible estate and no other member of the family of the deceased could claim any interest therein before the death of the deceased. The appeal filed by the accountable persons before the Appellate Controller was dismissed. On further appeal, the Income-tax Appellate Tribunal, Bangalore Bench, held that the amount of compensation was a joint family asset and s. 7(1) of the E.D. Act was applicable to it. The appeal was accordingly allowed.