CONTROLLER OF ESTATE DUTY Vs. NARASIMHAN P S

JUDGEMENT

(1.) IN these tax case references, at the instance of the Controller of Estate Duty, Madras, and the accountable person and another under section 64(1) of the Estate Duty Act, 1953 (hereinafter referred to as "the Act"), the following questions of law have been referred to this court for its opinion :

(2.) WHETHER, on the facts and in the circumstances of the case, the value of the properties settled by him on his five settlees by documents dated December 28, 1956, was includible in the principal value of the estate on his death ?

(3.) IN so far as the second question at the instance of the accountable person is concerned, it is seen that the deceased, out of the undivided half share retained by him, after the settlement dated June 17, 1956, in favour of his wife on December 28, 1956, settled an undivided one-tenth each in favour of his father-in-law, three brothers-in-law and a sister-in-law. The firm of K.V.G. S. and Co. formed on January 1, 1957, even as per the recital in the release deed, executed by the settlees from the deceased, was managing the properties and the deceased was in possession and management as managing partner. It is not in dispute that on April 13, 1962, K.V.G.S. and Co. was dissolved and the assets and liabilities of the firm were taken over by the deceased. The Tribunal had also found that the decree obtained in O. S. No. 87 of 1964 from the Sub-court, Coimbatore, after the death of Ganapathy Subramaniam, was collusive. Rents from the released lands had also been received by the deceased from October 22, 1962, to May 29, 1963, as per annexure B appended to the order of the Assistant Controller of Estate Duty. From this, it would follow that the properties which belonged to the deceased initially and which had been purported to be settled on the five settles, were secured by the deceased and the half share earlier settled came to belong to him and rents had been collected by him and it was not disputed that those properties were held by the deceased on the date of his death and, therefore, that would pass under section 6 of the Act and the Tribunal was right in concluding that it was unnecessary to invoke section 10 of the Act. Even on the footing that section 10 of the Act would apply, it is seen that the deceased donor was not in any manner excluded from the properties settled by him in favour of the five settlees, as, initially in his capacity as managing partner of K.V. G.S. and Co., he continued to possess and enjoy the properties, though purported to be settled and later on, on the dissolution of the firm, he had taken over all the assets and liabilities of the erstwhile firm of K.V.G.S. and Co. and had received the rents therefrom and there was thus no exclusion of the deceased, as a donor, by the settlees. We, therefore, agree with the conclusion of the Tribunal and answer the second question referred to us in the affirmative and against the accountable person.