M RANGANATHA SASTRI Vs. CONTROLLER OF ESTATE DUTY

JUDGEMENT

(1.) THIS is a reference under section 64(1) of the Estate Duty Act, 1953, and the question referred to us is "Whether, on the facts and in the circumstances of the case, the value of the two house properties at Rutland Gate and Balajinagar, standing in the name of Srimathi Gaja Gowri Ammal, widow of the deceased, was properly included in the principal value of the estate of the deceased ?" R. Subbaiah Naidu died on January 30, 1957, leaving his second wife and a will by which he had appointed two executors, who are the accountable persons. The estate of the deceased was valued for purposes of estate duty and in the principal value was included, by the Assistant Controller, the value of two houses together with their relative sites. On appeal, this inclusion was confirmed. At the appellate stage, the revenue proceeded on the basis that the two houses, together with the sites, were the subject-matter of gifts made by the deceased to his second wife. The question of benami, which was raised before the Assistant Controller, did not, therefore, loom large before the appellate authority, which is the Central Board of Revenue. But the appellate authority was of the view, like the Assistant Controller, that the gift was with reservation, within the meaning of section 10 of the Act. THIS view the appellate authority expressed on certain factual findings.

(2.) THE site on which the Rutland Gate house was constructed was purchased on September 4, 1939, in the name of the second wife of the deceased, and likewise the other site in Balajinagar on April 15, 1940. THE construction of these two houses was completed by 1941. THEre is no controversy that the entire money for the purchase of the sites as well as for the construction came from the deceased. THE two houses were let out and the tenancy agreement in respect of the Rutland Gate house was entered into between the deceased's second wife and the tenant on September 29, 1950. THE municipal records showed that the houses were registered in her name and the tax receipts in respect of the properties were naturally in her name too. In his will dated September 29, 1954, the deceased recited that he had already made a gift of the two houses together with the sites to his wife and they belonged to her absolutely. THE further facts found by the revenue are that the monthly rents were received in cheques drawn up in favour of the deceased and the same credited to his current account in the State Bank, that in March, 1956, this current account was converted into a joint account of the deceased and his second wife and that from 1942-43 to 1957-58 the deceased included the rents received from the two houses in his income returned for purposes of income-tax. It appears that when one of these houses was released by the Collector in July, 1949, the deceased was treated as the owner and the Accommodation Controller's order dated November 15, 1950, releasing the other house under the provisions of the Madras Buildings (Lease and Rent Control) Act, also proceeded on the basis that the deceased was the owner.