V R SONTI Vs. CONTROLLER OF ESTATE DUTY

JUDGEMENT

(1.) AT the instance of the accountable person, the following questions of law have been referred for the opinion of this court under section 64(2) of the Estate Duty Act, 1953 (hereinafter referred to as "the Act")

(2.) WHETHER, on the facts and in the circumstances of the case, the exemption under section 21 of the Estate Duty Act was not available to the deceased in respect of his movable properties in Ceylon "" * M. T. Veerappa Pillai, with whose estate we are concerned in this reference, was born in 1895 in Omandur Village, Lalgudi taluk, Tiruchy District, in India. He married Akilandathammal in India. In 1939, he left India for Galaha in Ceylon. In Ceylon, he acquired certain properties and also married one Aravammal, a resident of Ceylon, on September 17, 1940, and through her, he had a daughter, Vijayalakshmi, and two sons, Viswanathan and Rajendran. He was earning some income from some estates in Ceylon. The income earned by him from the assets in India were assessed in his hands as a non-resident. On July 23, 1951, he filed an application under the Indian and Pakistani Residents Citizenship Act, 1949, for registration as a citizen of Ceylon. But, this application was not granted till he died on March 7, 1965. However, his Ceylonese wife and children were later granted citizenship on the basis of the application filed by the deceased, M. T. Veerappa Pillai. He also left a will dated February 18, 1959, under which he bequeathed lifetime annuities of Rs. 1, 000 each for both his wives, Akilandathammal and Aravammal, and the other properties in favour of his children. On his death, Akilandathammal filed an account of the estate of the deceased, M. T. Veerappa Pillai, and, in that, she claimed that the value of the movable properties in Ceylon could not be included as properties passing on his death on the ground that the deceased, M. T. Veerappa Pillai, was domiciled in Ceylon and in terms of section 21 ( 1 ) (b) (i) of the Act, the movable properties situate outside India were exempt from estate duty. Before the assessment could be completed, Akilandathammal died and Rajendran, son of the deceased, M. T. Veerappa Pillai, adopted the return filed by Akilandathammal and reiterated the claim for exemption as the accountable person. The Assistant Controller of Estate Duty, Thanjavur, found that the deceased, M. T. Veerappa Pillai, had a wife and also owned properties in India and had been visiting India from Ceylon frequently and that he had also remitted cash to India and merely on the basis of the application for securing citizenship, it cannot be taken that he had abandoned the domicile of origin and acquired a domicile of choice. In that view, the value of the movables in Ceylon was included in the principal value of the estate and the duty payable was determined on that footing. On appeal by the accountable person to the Appellate Controller of Estate Duty, he took the view that, at all material times, the deceased, M. T. Veerappa Pillai, thought himself to be a citizen of Ceylon and this was also clearly manifested by the application made by him on July 23, 1951, and that the circumstances that he had a wife and other properties in India and had also been visiting India frequently would not establish that the deceased had not forsaken his domicile of origin. Finally, he concluded that the deceased, M. T. Veerappa Pillai, had abandoned his domicile of origin and had acquired a domicile of choice in Ceylon and, therefore, the value of the movable assets in Ceylon cannot be included in the computation of the principal value of the estate of the deceased and directed the deletion of the value of the movables in Ceylon. Aggrieved by this, the Revenue preferred an appeal before the Tribunal and the Tribunal took the view that abandonment of domicile of origin cannot be a matter of assumption and that the circumstance that the deceased, M. T. Veerappa Pillai, had applied for acquiring citizenship, which, however, was not granted when he was alive, would not establish abandonment of connections with India by the deceased, M. T. Veerappa Pillai, and there was also no intention made out to abandon the domicile of origin. In that view, the Tribunal concluded that the deceased, M. T. Veerappa Pillai, continued to be domiciled in India and the movable properties belonging to him situate in Ceylon were properly included in the principal value of the estate for the purpose of levy of estate duty. On the view so taken by the Tribunal, the two questions of law set out earlier have been referred to this courtLearned counsel for the accountable person, inviting attention to sections 3(1)(d) and 21(l)(b)(i) of the Act and strongly relying upon the circumstances that the deceased, M. T. Veerappa Pillai, had lived in Ceylon for nearly a period of 25 years and had also made an application for acquiring citizenship, contended that there was a clear manifestation of an intention on the part of the deceased, M. T. Veerappa Pillai, to abandon his domicile of origin and to acquire a domicile of choice in Ceylon and, therefore, the value of the movables in Ceylon ought to be excluded from the principal value of the estate. Our attention was also drawn in this connection to the decision reported in CED v. Dr. Ida Bella Scuddar 1980 (123) ITR 104, 1980 (14) CTR 295, 1980 (3) TAXMAN 460 (Mad). Per contra, learned counsel appearing for the Revenue contended that the domicile of origin continued and that the onus of proving that a domicile has been chosen in substitution of the domicile of origin is upon the person who asserts that the domicile of origin had been lost and that, in this case, the loss of domicile of origin and the acquisition of domicile of choice has not been clearly made out. Learned counsel further submitted that mere length of residence without any evidence of an intention to abandon the domicile of origin would not be of any significance and that the circumstance that the deceased made an application for acquiring citizenship in Ceylon, which, however, was not granted would not also avail the accountable person to claim that the domicile of origin has been lost and a domicile of choice in Ceylon had been acquired. The decisions reported in Kedar Pandey v. Narain Bikram Sah, 1966 AIR(SC) 160, 1965 (3) SCR 793, 45 ILR(Pat) 878, and CED v. Melnikoff 1982 (134) ITR 583, 1981 (22) CTR 271, 1981 (7) TAXMAN 63 (Bom) were also relied on in support of the submissions Before going into the rival contentions thus advanced, it will be necessary to briefly refer to the relevant provisions of law. Part III of the Act deals with exemptions from the charge of estate duty and sub-section (1) of section 21 of the Act runs as follows