GAZDAR D J Vs. CONTROLLER OF ESTATE DUTY

JUDGEMENT

(1.) THIS is a reference made under s.64(1) of the ED Act, 1953, by the Income-tax appellate Tribunal, Bombay Bench, at the instance of the accountable person.

(2.) ONE Mr. Jehangir Jivanji Gazdar, who died in 1951, had at the time of his death half share in a property called Laxmi Vilas and the other half belonged to his wife, Bachubai. Mr. Gazdar had made a will in regard to his half share in the property. Under the terms of the will it was provided that during the lifetime of his wife, Bachubai, she would be allowed to reside in the said property free of rent as long as she paid all outgoings in respect of the said property and on and after the death of his wife, his sons, Rustom and Dinshaw (in case both of them survive the deceased and his wife, Bachubai) were to reside in the said property free of rent so long as they paid all outgoings in respect of the said property including the cost of all repairs during the joint lives of the said sons, Rustom and Dinshaw. Under the will the trustees were, subject to the above-referred provisions, entitled to recover the rent and income of the said property and to pay out of the same all outgoings including the insurance premia and the cost of repairs. If there was any balance of income, it was to be paid in equal parts to each of the two sons during their lives and in case of the death of any one of them, the moiety of such income was to be paid to the other. If the two sons could not reside in the said property together or any of them pre-deceased the testator or his wife or on the death of let out the said property to any one of the said sons at such reasonable rent and on such terms and conditions as the trustees in their absolute discretion deemed fit. The recitals in the will provided that the property shall not be sold :

(3.) IN the appeal filed by the accountable person, the Appellate Controller took the view that on the death of the deceased, Bachubai, her exclusive right of residence in the property ceased altogether and, therefore, the right of residence in favour of the sons arose. This absolute right of residence in the property amounted, according to the Appellate Controller to exclusive beneficial interest in the property. Therefore, according to the Appellate Controller, the value of half the share in the property originally belonging to the husband of the deceased had been correctly included in the dutiable estate. The decision of the Madras High Court in the case of Manian Natesan vs. CED (1965) 56 ITR (ED) 5 (Mad), was quoted in support of the view taken by the Appellate Controller.