CONTROLLER OF ESTATE DUTY Vs. PARTHASARATHY REDDIAR G

JUDGEMENT

(1.) THIS is a reference under Section 64(1) of the Estate Duty Act relating to the inclusion of two amounts of Rs. 1,27,653 and Rs. 10,663 in the principal value of the estate of the deceased. One Govinda Reddiar died on 5th June, 1963. The aforesaid two amounts relate to two properties covered by a partition deed executed on 7th May, 1960, between the said Govinda Reddiar and his three sons, Jayarama, Balarama and Parthasarathy. The circumstances relating to this partition have been set out in the partition deed itself and we may briefly refer to them.

(2.) GOVINDA Reddiar started in the early part of this century a business, which prospered in the manufacture and sale of bricks, tiles, etc., at Ekattuthangal and other places. The business was treated as a joint family business and from the income of the business, various items of immovable properties were acquired. On account of advancing age and loss of eye-sight, GOVINDA Reddiar was unable to attend to the business completely and he, therefore, constituted a partnership in 1940 with his sons for conducting the said business. This partnership continued up to June, 1954, when, because of differences among the parties, it was dissolved. The parties were given liberty to carry on their separate businesses thereafter. The parties had then agreed in writing to effect division of the immovable properties belonging to the family. The parties thus became divided in status in 1954 and started living separately and were since then enjoying the joint family properties as separated members. There were differences among the parties regarding the actual division of the properties. Parthasarathy filed O.S. No. 752 of 1957 in the City Civil Court for taking accounts of the dissolved partnership. He filed also O.S. No. 2793 of 1959 for setting aside the sale of a property in Maharaja Surya Road, Pithapuram Nagar, Alwarpet, Madras, effected in 1959 by GOVINDA Reddy on the footing that it was his (GOVINDA Reddy's) self-acquired property. Parthasarathy's stand was that it was joint family property. It was in the midst of these disputes considered to be prudent and beneficial in the interests of the welfare of all the members of the family that they (these disputes) should be settled amicably. The terms so amicably agreed to were reduced to writing and formed the partition deed of 7th May, 1960.

(3.) THE Assistant Controller of Estate Duty went into the question as to whether the sum of Rs. 1,27,653.06 was dutiable. He found that the property was acquired only after the death of Govinda Reddiar and that he continued to enjoy the life interest over the entire property. He, therefore, held that there was a passing of the property by virtue of the provisions of Section 7 of the Act. As the interest of the deceased extended to the entire income from the property, in accordance with the provisions of Section 40 of the Act, he included the entire value and that is how he took Rs. 1,27,653 for assessment.