SHAKUNTALA BANERJI Vs. CONTROLLER OF ESTATE DUTY

JUDGEMENT

(1.) THE following questions have been referred for our opinion :

(2.) THE facts giving rise to these questions briefly stated are that late Sri Pearey Lal Banerjee, an advocate, had created a trust for his benefit and the benefit of his sons and daughter-in-law. THE trust was in respect of Govt. securities of the face value of Rs. 10 lakhs and the Imperial Bank of India (now State Bank of India), Strand Road, Calcutta, was appointed as the trustee. THE instrument of trust was executed on October 26, 1937. THE settlor had by Clause (3) of the instrument reserved to himself a right to revoke, vary or modify all or any of the trust and powers declared by the instrument or concerning the trust funds or the income thereof and by means of an instrument executed on April 28, 1950, certain provisions of the original trust deed were modified. THE main modification so effected was that from and after the death of the settlor the bank shall pay the net income of the trust funds to the settlor's son, Pranab Kumar Banerji, during his lifetime, if he survived the settlor and in case he predeceased the settlor or in the event of his death after having survived the settlor, the income of the trust funds was to be paid in equal shares to the other son of the settlor, Sunab Kumar Banerji, and his daughter-in-law, Shakuntala Banerji. It is not necessary to notice the other modifications made by that instrument.

(3.) ON behalf of the accountable person; the very same arguments were once again canvassed before us. However, after hearing parties' counsel we do not find much substance therein. In our opinion the case is squarely covered by the decision of the Supreme Court in CED v. Hussainbhai Mohamedbhai Badri [1973] 90 ITR 148. The material facts of that case were that one Eusufalli Ebrahimji had settled upon trust certain immovable properties and leasehold lands by an indenture dated July 15, 1938. Under the terms of the trust deed, the settlor was entitled to the net income of the trust properties during his lifetime and after his death that income was to be divided in three equal shares, one-third of which was to be given to Bai Safiabai during her lifetime. Out of the remaining two-thirds, one-third was to be given to Mohamedbhai and the remaining one-third was to be entrusted to Mohamedbhai for being utilized for the maintenance of the two wives and children of the settlor's youngest son who had died before the trust deed was executed. After the death of Safiabai, the trustees were to hand over the corpus to Mohamedbhai and the family of the youngest son in equal shares. Safiabai was also one of the trustees. ON the death of Safiabai on October 6, 1955, the question arose whether the entire trust properties or only one-third thereof passed on her death under Section 5 of the Act. ON appeal by certificate, it was held by the Supreme Court that only one-third of the trust properties passed on the death of Safiabai. Her right to the property was purely a personal right but that did not make much of difference because what is relevant in determining the scope of the expression " property passing on the death of the deceased " occurring in Section 2(16) of the Act is the change in the beneficial interest and not title. Reliance was placed on an earlier decision in Mahendra Rambhai Patel v. CED [1967] 63 ITR 645 (SC). It would thus be seen that the deceased had beneficial interest in the trust property and that interest passed on his death.