Judgment

HEGDE, J. :- Both these appeals, by special leave arise from the judgment of the High Court of Madras in a Reference under S. 64 (1) of the Estate Duty Act, 1953 (to be hereinafter referred to as the Act).

2. The question of law referred in that case is :

"Whether, on the facts and in the circumstances of the case, the properties settled by the deceased by the six deeds of settlement (two of them dated 26th June, 1951 and four of them dated 30th June 1951) valued at Rs. 7,38,656/- or any part thereof was not liable for inclusion in the estate of the deceased as property deemed to pass on his death."

3. The High Court answered that question partly in favour of the Revenue and partly in favour of the assessee. It opined that the value of the property gifted in favour of the wife of the deceased is not to be taken into consideration in computing the value of the property that passed on the death of the deceased. In respect of the properties gifted to the sons, grandsons and the daughter of the deceased only the annual payments that had to be made to the deceased as well as his right to maintenance should be valued for the purpose of determining the extent of the right that passed on his death.

4. The facts of the case material for the purpose of deciding the question of law formulated above, as could be gathered from the case stated are as follows :

One Ratnasabapathy Pillai was the owner of the properties with which we are concerned in this case. He died on February 5, 1959 leaving behind him his four sons, some grandsons wife and daughter who are the accountable persons. They furnished an account of the properties passing on the death of the deceased to the Deputy Controller of Estate Duty, Madras who was the assessing authority. The Deputy Controller did not accept the correctness of the return made by them. He added to the return made, the value of the following properties settled by the deceased on his wife, sons, grandsons and daughter.

Value of property settled.

Rs.

1. Deed dated the 26th June, 1951 settling 67.60 1/2 acres of agricultural lands on Shri D. Nataraja Pillai, son 1,01,408

2. Deed dated the 26th June, 1951 settling 74.91 acres of agricultural lands on Shri R. Ramlingam Pillai, son 1,12,365

3. Deed dated the 30th June, 1951 settling 80.72 acres of agricultural lands on Shri R. Subramania Pillai, son 1,21,080

4. Deed dated the 30th June, 1951 settling 67.95 acres of agricultural lands on Ganapathi Pillal and Sivakumar Pillai, minor grandsons of the deceased 1,01,925

5. Deed dated the 30th June, 1951 settling 133.55 acres of agricultural lands on Smt. T. Sivakumu Ammal, daughter 1,99,623

6. Deed dated the 26th June, 1951 settling 68.17 acres of agricultural lands on the wife, Smt. Rajambal 1,02,255

Total 7,38,656/-

5. By the deeds in question the deceased settled the properties in favour of the beneficiaries absolutely and with full power of alienation. The deeds in favour of his sons and the minor grandsons contained a provision as under :

"You have to pay me during my lifetime a sum of Rs. 1000/- per year for my domestic expenses."

The deed in favour of the daughter contained a provision":

"You have to maintain myself and my wife during our lifetime."

The deed in favour of the wife contained the following words :

"In the hope that you will support me during my lifetime, I do hereby settle........."

6. The Deputy Controller held that the deceased had reserved to himself an interest for life in the properties comprised in the above settlements, within the meaning of S. 12 of the Act. He accordingly included the value of those properties for the purpose of determining the value of the properties that passed on the death of the deceased. The accountable persons appealed to the Central Board of Direct Taxes, New Delhi. They contended before the Board that the conditions or stipulations contained in the deeds of settlement in favour of the sons, minor grandsons and daughter merely amounted to an expression of a desire an