PARTHASARATHY R Vs. CONTROLLER OF ESTATE DUTY

JUDGEMENT

(1.) ONE Ramabadra Iyer died on October 14, 1962, and the proceedings relate to the assessment to estate duty of his dutiable estate. He and his paternal cousin, Kasivisvanatha Iyer, originally constituted an HUF. There was a partition as between them on April 5, 1959. After such partition, the HUF of which the deceased was the karta, consisted of himself, his wife, Parasakthi Ammal, and his minor son, R. Parthasarathy. The deceased had two daughters, Rama Devi Ammal and Naga-veni Ammal, both of whom were married. On July 25, 1959, the deceased executed a registered settlement deed by and under which he settled upon his wife, Parasakthi Ammal, and his two married daughters referred to above, lands set out in the Schedules ' A', ' B' and 'C', respectively, thereto to be taken by them absolutely. The schedules give various items of immovable properties and the value of the properties mentioned in each schedule is given as Rs. 10,000. Pattas for these lands were also got transferred in the name of the respective donees. On January 22, 1960, a registered partition deed was entered into by the deceased and his wife acting as the guardian of the minor son, Parthasarathy, by and under which the properties described in the 'A' schedule thereto were allotted to the share of the deceased and the properties set out in 'B' schedule thereto and valued at Rs. 17,350 were allotted to the share of the minor. The properties set out in 'A' schedule thereto included those which the deceased had already settled on his wife and two daughters under the settlement deed dated July 25, 1959. On his death on October 14, 1962, his widow filed an estate duty account in which the value of the properties settled by the deceased on her and the two daughters under the settlement deed dated July 25, 1959, was not included. It was contended before the Asst. CED that there was an oral partition between the deceased and his son by metes and bounds even prior to the settlement deed dated July 25, 1959, and the properties were settled only subsequently and those properties were allotted to the share of the deceased in the partition deed. The Asst. CED did not accept the contention of the accountable person that there was a partition between the father and son even before July 25, 1959, and, therefore, on the date of the settlement, the settled properties belonged not to the joint family, but to the deceased alone. He held that the deceased and his minor son became divided only under the partition deed dated January 22, 1960, and consequently the gifts made prior thereto on July 25, 1959, were void and since those properties have been allotted to the share of the deceased under the partition deed dated January 22, 1960, they passed on his death under Section 5. He, therefore, included Rs. 2,96,085 being the value of the said properties in the dutiable estate. He also estimated the income from such lands for the two years prior to the death of the deceased as Rs. 57,000 and included the same under Section 9 on the ground that the deceased must be deemed to have gifted the income therefrom to the donees, since he had allowed them to take the same in pursuance of void gifts.

(2.) AGGRIEVED by such assessment, the heirs preferred appeals to the Appellate CED. The Appellate Controller confirmed the assessment made by the Assistant Controller agreeing with his view that the gifts were void. The only addition he made in his order was that as far as the income of Rs. 57,000 was concerned, it was assessable even under Expln. 2 to Section 2(15) of the E.D. Act.

(3.) THE second contention put forward by the learned counsel for the accountable person is that if the gifts in favour of the three persons were void, the result of that will be that the properties which are the subject-matter of the settlement deed reverted to the HUF and consequently what, passes on the death of the deceased is only his interest in the property and not the value of the entire properties. We are of the opinion that this argument is misconceived. We have already referred to the fact that in the partition deed dated January 22, 1960, the properties which are the subject-matter of the settlement deed dated July 25, 1959, were allotted to the share of the deceased. As we pointed out already, there were certain artificial and laboured recitals in the partition deed and one such recital being that such an arrangement was contemplated even at the time of the settlement deed. Whatever it may be there is no dispute that under the partition deed, the properties which are the subject-matter of the settlement deed were allotted to the share of the deceased. If so, with effect from January 22, 1960, there was no joint family in existence and the properties settled on July 25, 1959, belonged only to the deceased and since there was no joint family, it could not have belonged to a non-existent joint family. THE learned counsel for the accountable person then contended that if we are acting on the recital contained in the partition deed that the settled properties were allotted to the share of the deceased, we must equally act on the recital contained in the partition deed that there was an earlier arrangement to allot these properties to the deceased. We are unable to accept this argument. THE finding is that there was no partition prior to July 25, 1959. As a matter of fact, even the partition deed dated January 22, 1960, does not state that there was an earlier partition and it merely evidenced that earlier partition. Under those circumstances, we are unable to hold that there is any substance in this contention.