CONTROLLER OF ESTATE DUTY Vs. K NARASAMMA

JUDGEMENT

(1.) AT the instance of the CED, Andhra Pradesh, Hyderabad, the I.T. Tribunal of Hyderabad, has made this reference under s. 64(1) of the ED Act of 1953, for the opinion of this Court on the following questions of law :

(2.) WHETHER, under the facts and circumstances of the case, the value of property No. 6937 passed either wholly or partly on the death of the deceased ?" The material facts that give rise to these questions areas follows: One Kailasa Venkanna got divided from his brother, Kailasa Krishna, some time in the year 1895 and executed a registered will on 5th Aug., 1907, by which he bequeathed to his wife, Kailasa Narasamma, his movable and immovable properties. Under the same will, he also authorised her to adopt a boy for him in the event of his dying without a male issue. The said Venkanna died issue less some time in the year 1930. Later, his wife entered into an ante-adoption agreement with one Tondepatu Venkata Ramayya, minor, aged 17 years, through his natural father, Tondepatu Adeyya on 15th Feb., 1943, under which the said Adeyya had agreed to give his son, Venkataramaiah, in adoption to Narasamma on the condition that she would be in sole possession and enjoyment of all the rents and profits of all the malgis and houses built on the land comprised in lease No. 1357 dt. 29th Jan., 1942, during her lifetime and after her death, the said properties should absolutely belong to the adopted son, subject to any debts that had to be discharged by her. In pursuance of the said agreement, a deed of adoption was executed by the lady on 17th Feb., 1943, under which it was clearly stated that she would be in possession and enjoyment of all the immovable properties during her life-time and that after her death, the adopted son would be the absolute owner of those properties. Narasamma died on 22nd Feb., 1972. In the estate duty assessment proceedings, it was contended on behalf of the adopted son, who is the accountable person, that the property bearing door No. 6937 in General Bazar, Secunderabad, belonged to the joint family of Narasamma and himself and that since she was not a coparcener, the said property did not form part of her estate. The Asstt. Controller observed that the deceased, Narasamma, had life interest in the entire extent of the property by virtue of the ante-adoption agreement. He further observed that the said agreement was valid in law in view of the decision of the Privy Council in Krishnamurthi vs. Krishnamurthi, AIR 1927 PC 139. In the end he held that the deceased had a limited life interest in the entire extent of the property and it was a case of cesser of interest assessable under s. 7 of the ED Act and the full value of the said property had to be taken as the value of such interest ceasing on death. He estimated the value of the said property at Rs. 1,85,000 accordingly and included the same in the principal value of the estate of the deceased.

(3.) BUT the Controller was not satisfied with the decision of the Tribunal and wanted the Tribunal to make a reference on the questions formulated above. We have no hesitation to hold that the Tribunal was justified in not accepting the finding of the Appellate Controller that Narasamma acquired undivided interest of her husband on his death under the Act XVIII of 1937 and the limited interest became the absolute interest under s. 14 of the Hindu Succession Act and she was, therefore, entitled to half the interest in the suit properties since Venkanna died in the year 1930 long prior to Act XVIII of 1937 and hence she could not have acquired any limited interest in the properties left by her husband on his death and the question of her acquiring absolute rights under s. 14 of the Hindu Succession Act does not arise.