A RANGANATHAN Vs. CONTROLLER OF ESTATE DUTY

JUDGEMENT

(1.) THIS is a reference made to this Court under Section 64 (1) of the Estate Duty act, and the question of law referred tc this Court is the following:

(2.) ONE Annadurai Aiyangar died on the 19th February 1954. He left surviving him his widow, three sons and three daughters. The applicant is the eldest of the sons. He, as one of the accountable persons, furnished an account of the estate. In the original account filed by him, certain properties were not included. In respect of one such item, a house property, the applicant claimed that it belonged to him exclusively, and with regard to the rest, the contention was that the deceased annadurai Aiyangar, who had acquired them, had thrown them into the family hotchpot so that those items became the joint family property of Annadurai and his three sons. It was further claimed that in 1949 a partition had taken place. In that partition, no part of these properties had been allotted to Annadurai, with the result that there was no property belonging to the deceased which could pass on his death. The Assistant Controller of Estate Duty however held that according to the recitals in the doument, the deceased Annadurai Aiyangar reserved to himself both the power of management of the properties as well as the right to enjoyment of the entire income therefrom during his lifetime. He thought that it was only a deed of settlement and that therefore the properties passed on the death of the deceased. He, however, accepted the contention that in respect of the property included in the A schedule, that item appeared to have been gitted away to a daughter absoultely, Annadurai only purporting to collect the income therefrom during his lifetime. He therefore excluded the A schedule properties. An appeal was taken to the Central Board of Revenue, which rejected the contentions advanced by the appellant and held that in so far as the properties covered by schedules B, C and D are concerned, the provisions of Section 10 of the Act were applicable and that they should be included in the principal value of the estate which passed on the death of Annadurai. On the application of the assessee, the question of law that has been set out earlier stands referred to this Court.

(3.) IN view of the contentions raised, it is necessary to examine the scope of the document of the year 1949. This purports to be a partition agreement entered into by Annadurai Aiyangar and his three sons. According to the recitals of this document, the properties set out in sche-dule E were the joint family properties. Factually those properties were not divided by metes and bounds but were left to be enjoyed in common by the three sons. The document set out that the properties other than those tound in the E schedule had been purchased with the separate earnings of Annadurai Aiyangar. Some of them had been purchased jointly in the name of Annadurai and his eldest son Ranga-nathan and were being enjoyed as joint family property. Annadurai Aiyangar had also transferred shares in several companies which he had purchased with his separate funds in the names of two of his sons. He had also taken mortgages jointly in his name and in that of his youngest son. The document further purported to deal with a half right in the properties mentioned in schedules A and B which really belonged to the mother of the applicant, that is to say, the wife of Annadurai. That lady had obtained those properties by virtue of a will executed by her father. Annadurai aiyangar claimed to have discharged some debts on those properties and as a result those properties were treated as joint family properties.