ALLADI KUPPUSWAMI Vs. CONTROLLER OF ESTATE DUTY

JUDGEMENT

(1.) THIS is a reference under Section 64(1) of the Estate Duty Act, 1953. Sri Alladi Krishnaswami Iyer, who died before the Estate Duty Act came into force, had, during his lifetime, settled certain properties absolutely on his wife Srimathi Alladi Venkalakshmamma, and had also declared certain other properties as joint family properties. The lady having died on January 5, 1956, the principal value of her estate passing on her death was determined by the Revenue at Rs. 7,25,527/-THIS sum included Rs. 2,02,271/- as the value of her l/4th share in the properties belonging to the Hindu family consisting of herself and her three sons. The Central Board of Revenue, agreeing with the Estate Duty Officer upheld the inclusion as warranted by Section 7(1) and dismissed the appeal from the assessment order. The Board held the view that the Hindu widow's estate created by Section 3(2) of the Hindu Womens Rights to Property Act, 1937 was an interest in property which ceased on the death of the widow attracting duty, and that Attorney-General of Ceylon v. Arunachalam Chettiar, (1958) 34 ITR (ED) 20 (PC) had no application to such a case.

(2.) THE original reference to this Court was of the following three questions:--

(3.) IT would be proper, and necessary, in our opinion, to understand the words "property", "interest", and "benefit" in the context and in the light of these provisions. IT follows that though property, or an interest in property may well be as included in the definition of the term, "property", still it may or may not be so for purposes of a particular section in the Act. For instance, it is only property that passes in the sense of passing hands by way of inheritance, or other form of devolution, which seems to attract Section 5 Likewise, for purposes of Section 6, it must be property which the deceased at the time of his death was competent to dispose of. So also, for application of the first part of Section 7(1), it should b'e such interest in property, as on its cesser, the benefit that accrues or arises should be referable to the whole or less than the whole income of the property. The implication is that if this measure in terms of income of the property is not apposite to the cesser of an interest, it will not be an interest such as is contemplated by Section 7(1). The inclusive provision of the sub-section does not seem to affect this construction as the principal value of the class of interest with the coverage is value accruing to the members contained in Section 39, and not on the basis of valuation of benefits from interest ceasing on death under Section 40. IT is clear from the language of Section 49(b) that the cesser benefit by ceasing of the corresponding interest is an addition- to the property equal to the income to which the interest extended.