LAKSHMISAGAR REDDY Vs. CONTROLLER OF ESTATE DUTY

JUDGEMENT

(1.) This is reference under section 64 (1) of the Estate Duty Act, 1953 (hereinafter referred to as "the Act") at the instance of the accountable person, by the Income-tax Appellate Tribunal, Hyderabad Bench, for the opinion of this Court on the following question of law: "Whether, on the facts and in the circumstances of the case, the compensation amount of Rs. 7 ,960 was property passing on the death, liable to estate duty under the Estate Duty Act of 1953?"

(2.) The material facts as disclosed from the statement of case may briefly be stated : The accountable person's husband, N. Vidyasagar Reddy, a captain in the Indian Airlines Corporation, died in an air accident. The Indian Airlines Corporation (employer) paid to the deceased captain's wife (applicant herein) a sum of Rs. 91,586 which included a sum of Rs. 74,960 towards compensation under rule 73 of the Indian Airlines Corporation Employees' Service Rules and Establishment Orders. The accountable person claimed exemption in respect of the compensation amount of Rs. 74,960 on the ground that the same was not property that passed on to her on the death of her husband since the deceased had no vested or contingent interest in it. Rejecting the claim of the accountable person and relying upon the decision of the Delhi High Court in Controller of Estate Duty v. A.T. Sahanil, the Assistant Controller included the sum of Rs. 74,960 in the estate of the deceased. The appeals by the accountable person to the Appellate Controller and the Income-tax Appellate Tribunal were without success. Hence this reference.

(3.) The contention of Sri C.Trivikrama Rao on behalf of the accountable person is that the deceased captain did not acquire any right in respect of the compensation amount of Rs. 74,960 paid by his employer after his death to his wife, the accountable person, at any time during his lifetime till his death. The amount is not payable automatically. The employer has discretion under rule 73 to pay the same only when the accident is not attributable to the decased's own negligence, default or breach of instructions. Therefore, it does not form part of the estate left by the deceased captain.