CONTROLLER OF ESTATE DUTY Vs. ARUNACHALAM CHETTIAR

JUDGEMENT

(1.) At the instance of the Controller of Estate Duty, Kerala, the Income-tax Appellate Tribunal, Madras Bench, acting under section 64(1) of the Estate Duty Act, 1953, has referred the following question to this court :

(2.) The partition deed, dated 6th December, 1954, is annexure "A" to the statement of the case and this partition deed was executed among the deceased, Shri Pachayappa Chettiar, and his two sons, Arunachalam Chettiar and Kandaswamy Chettiar. It is stated at the beginning of this document that the parties to the document were an undivided Hindu family and that they did not possess any coparcenary properties at the time of the execution of the partition deed. The properties dealt with under the partition deed, it is asserted in the document were acquired with the joint labour and efforts of the father and his two sons. The only property with which we are concerned in this reference related to the "mill property" though the question as worded may indicate that all the properties in the partition deed are included in the reference. This, in the mill property, consisted of land, factory and building. As a result of the partition deed, though the intention appears to have been to divide all the properties including the immovable properties equally among the three members of the family, the bulk of the properties were actually allotted to Pachayappa Chettiar. To his share was also allotted the mill property. In order to equalise the shares, it was provided that Pachayappa Chettiar should pay to his sons, Arunachalam and Kandaswamy, the sum of Rs. 24,293 and Rs. 24,243, respectively, the share of each being value at Rs. 29,442-10-2. This partition deed was followed by a partnership deed. The essential feature of this partnership deed was that the said Arunachalam Chettiar and Kandaswamy Chettiar were given one-third interest in the mill property and by conferring such right which was to be their contribution towards the partnership assets, the liability of Pachayappa Chettiar under the partition deed to pay the amounts to the sons which we have mentioned was wiped out. Under this partnership deed, the business continued till the death of Pachayappa Chettiar on 21st January, 1960. The question then arose as to the property that can be said to have passed at the time of his death. According to the assessee it was only one-third interest in the mill property and according to the department it was the entire interests on such property. The assessee case has been accepted by the Tribunal and the question to be decided is whether this is the correct view to be taken.

(3.) We may notice here that the main contention that was raised by the assessee before the Tribunal was that all the properties were joint family properties at the time of the partition deed. Those properties have been acquired by the joint efforts of the members of the family. Counsel for the assessee also stressed before us that this case of the assessee has been accepted by the Tribunal. We have scanned the order of the Tribunal and we are unable to find anything specific other than the remark contained in paragraph 7 of the order of the Tribunal reading as follows :