CONTROLLER OF ESTATE DUTY Vs. KASTURI LAL JAIN

JUDGEMENT

(1.) THESE two references, namely, Reference No. 2 of 1972 and Reference No. 5 of 1972, raise common questions of fact and law and, therefore, we propose to decide them by one common order.

(2.) REFERENCE No. 2 of 1972 relates to the estate of Babu Lal Jain who was a partner in the firm of Messrs. Kasturi Lal Jain and Sons, Srinagar, dealing in brassware. The deceased, Babu Lal Jain, unfortunately died in an air crash and his heirs were paid compensation of Rs. 42,000 by the Indian Airlines Corporation. This amount, however, was not included in the estate of the deceased and a note of this fact was made in the return. Similarly, in REFERENCE No. 5 of 1972, the deceased Shri Nand Lal Muju, resident of Karapora Khushki, Rainawari, Srinagar, died in a plane crash. The heirs of the deceased, namely, his wife, Mst. Mohini Devi, received a sum of Rs. 42,000 as compensation from the Airlines Corporation which was not included in the estate of the deceased under the provisions of the Estate Duty Act (hereinafter to be referred to as " the Act"). In both the cases the Assistant Controller of Estate Duty held that the compensation paid to the heirs of the deceased should have been included in the estate of the deceased and was a property which passed to the heirs of the deceased and, therefore, they be assessed to duty under the provisions of the Act. The assessees then went up in appeal to the Zonal Appellate Controller who allowed the appeal and held that the amount of Rs. 42,000 ought not to have been included in the estate of the deceased and he accordingly deleted the amount in both the cases. The department then went up in appeal to the Income-tax Appellate Tribunal, Chandigarh Bench, who after hearing counsel for the parties affirmed the decision of the Zonal Appellate Controller and held that the amount of compensation of Rs. 42,000 in each case was not the property of the deceased which passed to his heirs and was, therefore, not liable to estate duty. In taking this view, the Tribunal observed that there was no authority directly in point but relied on several authorities referred to in various text books. The Tribunal was also of the view that since the compensation was paid not to the estate of the deceased but to his dependants, it could not be considered in any sense as the property of the deceased. The Tribunal accordingly dismissed the appeals and held that the sum of Rs. 42,000 in each of the two references should not be included in the value of the estate of the deceased in the two cases. The revenue being aggrieved by the decision of the Tribunal made an application to it for making reference to this court for deciding the questions of law involved and, accordingly, the Tribunal has made the two references in which the same point is involved. The point referred to us by the Tribunal is as follows:

(3.) IN order to answer the point of law referred to us in the two references, it may be necessary first to scrutinize the material provisions of the Act. To begin with it is necessary to analyze the ingredients of Section 5 of the Act which is the charging section and which runs thus :