MURAT SINGH Vs. CONTROLLER OF ESTATE DUTY

JUDGEMENT

(1.) THIS is a reference under S. 64 (1)of the Estate Duty Act, 1953.

(2.) ONE Harchand Singh who was a displaced person from West Pakistan and was residing at kotah in the State of Rajasthan died on 20th February, 1954. He had left extensive immovable properties in Pakistan in respect of which a claim had been filed by him which had been duly verified under the Displaced Persons (Claims) Act, 1950, before his death, the amount of the verified claim being Rs. 34,85,030/ -. The controller of Estate Duty determined the principal value of the entire estate of the deceased at Rs. 43,66,249/- which included the aforesaid amount of claim. This was done on the return filed by his son and heir Murat Singh who was an accountable person within the meaning of sub-section (1)of Section 53 of the Act. Murat Singh preferred an appeal to the Central Board of Revenue under Section 63 of the Act against the order of the controller his main objection being that the amount of Rs. 34,85,030/- representing the "verified claim" could not be included while computing the principal value of the estate of his deceased father. The Board, however, came to the conclusion inter alia that the "verified claim" under the displaced Persons (Claims) Act, 1950, did constitute "property" passing on death for purposes of estate Duty, even though the death occurred before the passing of the Displaced Persons (Compensation and Rehabilitation) Act, 1954. The Board, however, considered that the amount to be included in the Estate Duty assessment was not the full amount of the "verified claim" but the amount of "compensation" payable according to the scales of payment laid down by the displaced Persons (Compensation and Rehabilitation) Rules, 1955. The assessment was ordered to be modified accordingly. Murat Singh moved the Board for a reference on a question of law to this Court and the Board has referred the following question to us: "whether on the facts and circumstances of the case, the amount of Rs. 2,00,000/- being the compensation payable under the Displaced Persons (Compensation and Rehabilitation) Act, 1954, is liable to Estate Duty?"

(3.) THE Displaced Persons (Claims) Act, 1950, laid down the procedure for registration of claims of displaced persons with regard to properties left in West Pakistan which were to be enquired into by officers appointed under the Act who were to pass such orders as they thought fit in relation to the verification of the claim and the valuation of such claim. There is no provision whatsoever in the aforesaid enactment providing for any legal rights that would attach to such claims or clothing them with any incidence of property. According to the permeable of the Act, it was to provide for the registration and verification of claims of displaced persons in respect of immovable property in Pakistan. It was only when the Displaced Persons (Compensation and Rehabilitation) Act, 1954, was enacted that provisions were made for determination of the amount of compensation and the form and manner of its payment to displaced persons. According to S. 4, displaced persons could make applications for payment of compensation in the prescribed from the Settlement Officers within a prescribed period and every application for payment of compensation had to contain certain particulars, one of which was the amount of verified claim. "verified claim" was defined by S. 2 (e) of that Act. The determination of the amount of compensation was to be made by the Settlement commissioner as provided by S. 7. Section 8 laid down the form and manner of payment of compensation. That was to be paid out of the compensation pool in accordance with such amount as had been determined under S. 7. The compensation pool was to consist of the evacuee property and cash balance lying with the Custodian and other assets etc, as given in S. 14. Rules were then promulgated under the aforesaid Act (Displaced Persons (Compensation and rehabilitation) Rules, 1955 ). These Rules dealt with the detailed procedure and the machinery by which compensation was to be determined and the manner in which it was to be paid. There can thus be no manner of doubt that any legal rights that came into being in the matter of receiving compensation by displaced persons who had left their properties in Pakistan were created by the Act of 1954 and not by the earlier Act of 1950 which only dealt with the registration and verification of claims. In the present case it has, therefore, to be seen whether the verified claim under the Displaced Persons (Claims) Act, 1950, could constitute "property" which passed on the death of the deceased for the purposes of Estate Duty.