Judgment

HEGDE, J.:- This appeal by certificate arises from the decision of the High Court of Gujarat in a Reference under Sec. 64 (1) of the Estate Duty Act (to be hereinafter referred to as the Act). Therein the Tribunal referred, partly at the instance of the Department and partly at the instance of the accountable person three questions of law said to arise from its order, for the decision of the High Court. The accountable person at whose instance the last question was referred informed the High Court that he does not desire to have any answer to that question; consequently the High Court did not answer that question. The High Court answered the first question in favour of the accountable person. In view of that answer, it thought it unnecessary to answer the second question. The only question calling for decision is question No. 1, which reads:

"Whether on the facts and in the circumstances of the case, the whole of the Trust estate was to be included in the assessment or only a portion thereof and if so what portion?"

2. Herein we are concerned with the estate of Bai Safiabai (the widow of Eusufalli Badri) who died on 6-10-1955. The High Court opined that only 1/3rd of the trust estate of which the deceased was one of the trustees passed on her death. The correctness of that conclusion is challenged by the Department. According to the Department, the entire Trust estate passed on the death of the deceased.

3. The material facts of the case may now be stated. One Eusufalli Ebrahimji settled upon trust certain immovable properties and lease-hold lands by an indenture dated 15-7-l938. Under that deed three trustees were appointed. They were Eusufalli (the settlor), his wife Bai Safiabai (the deceased) and their eldest son Mohamedbhai, the accountable person. Under the terms of the trust deed, the settlor was entitled to the net income of the trust properties during his lifetime. After his death, the income of those properties was to be divided into three equal shares; 1/3rd of the income was to be appropriated by Bai Safiabai during her lifetime. Out of the remaining 2/3rds, 1/3rd was to be paid to Mohomedbhai and the remaining 1/3rd was to be entrusted to Mohomedbhai for being utilised for the maintenance of the two wives and the children of the settlor s youngest son Salebhai, who had died before the trust deed was executed. The settlor prescribed in the trust deed that after the death of Safiabai:

"The trustees divide the trust properties in such a manner that one equal share i. e. half share shall be given to my eldest son, Mohomedbhai, and if he has died before that then, that share shall be given to his children and wife and that division shall be made according to the dictates of my religion and the other half share shall be given to the wife and children of Salebhai in such manner that the two anna share shall be given to each of his two wives and the remaining twelve annas shall be distributed amongst his (Salebhai s) children according to the dictates of my religion and after doing so this trust shall come to an end."

(The remaining clauses in the trust deed are not relevant).

4. Safiabai, as mentioned earlier, died on 6-10-1955. The value of the estate left by her was determined by the Assistant Controller at Rupees 4,15,000/-. According to the Assistant Controller the estate left by the deceased consisted of two items (a) of her individual properties and (b) 1/3rd of the trust properties.

5. The accountable person objected to the inclusion of the value of the 1/3rd share in the trust properties in the computation of the value of the estate that passed on the death of Safiabai. But that objection was overruled by the Assistant Controller.

6. Aggrieved by that decision, the accountable person went up in appeal to the Appellate Controller. But, later on the accountable person sought to withdraw the appeal. The Appellate Controller refused to give him permission to withdraw the appeal. Further, he gave him notice req