Back
High Court Of Calcutta
Dipak Kumar Sen, Shyamal Kumar Sen
CONTROLLER OF ESTATE DUTY - Appellant
Versus
SMT.SMRITI BANERJEE - Respondent
Matter 1321 Of 1979
Decided On : 03/02/1987
ESTATE DUTY ACT, 1953 - SECTION 10 - GIFT WITH RESERVATION - EXTENT OF INCLUSION IN PRINCIPAL VALUE OF ESTATE - GIFT SUBJECT TO CHARGE - ONLY CAPITALISED VALUE OF CHARGE INCLUSIBLE - WORDS "TO THE EXTENT" - INTERPRETATION.
Fact of the Case:
Deceased made a gift of five immovable properties to his son by deed dated 25th March 1959, subject to a charge of Rs. 50 per month for payment of tax and cost of repairs of another property during the lifetime of the deceased and his wife. The deceased died on 4th June 1963. The Assistant Controller of Estate Duty reopened the assessment and included the market value of the gifted properties in the principal value of the estate, holding that the gift came within the mischief of Section 10 of the Estate Duty Act, 1953. The Appellate Controller, following the decision in Rashmohan Chatterjee v. CED [1964] 52 ITR (ED) 1, held that only the value of the properties to the extent of the benefit reserved by the deceased should be included in the principal value of the estate. On appeal by the Revenue, the Tribunal upheld the order of the Appellate Controller.
Finding of the Court:
The Tribunal was right in holding that only a sum of Rs. 9,600 (capitalised value of the charge on the properties gifted by the deceased to the extent of Rs. 50 per month) will pass on the death of the deceased and it is includible in the estate for the purpose of Estate Duty Act, 1953. The Tribunal did not misdirect itself in law in holding that the reservation did not extend to the entire extent of the benefit reserved by the deceased for the purpose of Section 10 of the Estate Duty Act, 1953. The Tribunal was right in law in holding that the aggregate value of the properties did not pass on the death of the deceased under Section 10 of the Estate Duty Act but only the capitalised value of the benefit could be included in the estate for the purpose of the Estate Duty Act, 1953.
Issues: (1) Whether, on the facts and in the circumstances of the case, and on a proper interpretation of the deed of gift dated twenty-fourth day of March one thousand nine hundred and fifty-nine, the Tribunal was right in law in holding that only a sum of Rs. 9,600 (rupees nine thousand six hundred) being the capitalised value of the charge on the properties gifted by the deceased to the extent of Rs. 50 (rupees fifty) per month will pass on the death of the deceased and it is includible in the estate for the purpose of Estate Duty Act, 1953 ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal misdirected itself in law in holding that the reservation did not extend to the entire extent of the benefit reserved by the deceased for the purpose of Section 10 of the Estate Duty Act, 1953 ? (3) Whether, on the facts and in the circumstances of the case and in view of the fact that the deceased had created a charge of Rs. 50 (Rupees fifty) per month on all the five house properties gifted by him, the Tribunal was right in law in holding that the aggregate value of the properties did not pass on the death of the deceased under Section 10 of the Estate Duty Act but only the capitalised value of the benefit could be included in the estate for the purpose of the Estate Duty Act, 1953 ?
Ratio Decidendi: The words "to the extent" in Section 10 of the Estate Duty Act, 1953, mean that if the donee did not assume beneficial possession and enjoyment of a part of the gifted property and retained it to the entire exclusion of the donor or of any benefit to him by contract or otherwise, estate duty shall be payable only in respect of that part or fraction of the property given in gift. In the instant case, the gift was not made without any reservation or qualification, as the properties were shorn of certain rights in favour of the donor. The retention of the benefit in the property in favour of the donor is referable to the rights of which the property gifted was shorn of in favour of the donor. Therefore, only the capitalised value of the charge on the properties gifted by the deceased to the extent of Rs. 50 per month will pass on the death of the deceased and it is includible in the estate for the purpose of Estate Duty Act, 1953.
Final Decision: Question No. 1 is answered in the affirmative, question No. 2 in the negative and question No. 3 in the affirmative, all in favour of the assessee.
( 1 ) THE facts found or admitted as on record are, inter alia, that one Raghunath Banerjee died on June 4, 1963. After his death, his estate was assessed to estate duty in the hands of the accountable person. The initial assessment was made on February 2, 1968, which was subsequently revised on July 29, 1970, and January 10, 1972.
( 2 ) DURING his lifetime, the deceased by a deed dated March 25, 1959, made a gift of five immovable properties which were all let out, viz. , premises Nos. 11a, 11/1a, 11b, 11/1b and 10/1, Radha Mohan Saha Lane Calcutta, to his son, Benoy Kumar Banerjee, absolutely and for ever and delivered possession of the same to the latter. It was declared in the said deed that there would be a charge upon the said properties given in the gift of Rs. 50 per month for payment of tax and cost of repairs of premises No. 25, Chorebagan Lane, Calcutta, during the lifetime of the deceased and his wife. It has been found that the deceased, during his lifetime, used the said premises No. 25, Chorebagan Lane, Calcutta, as his residence. The donee accepted the gift.
( 3 ) THE Assistant Controller of Estate Duty reopened the assessment of estate duty and an order was passed on reassessment on August 2, 1972. It was held that as the deceased had reserved some benefit for himself in the said immovable properties given in gift by him to his son, the said properties and the possession and enjoyment thereof were not retained by the donee to the entire exclusion of the donor and as such the said gift came within the mischief of Section 10 of the Estate Duty Act, 1953, and that the said properties should be deemed to pass on the death of the deceased. It was noted that in the original assessment, the value of the said properties given in gift had not been included in the estate and, therefore, escaped assessment. It was directed that a sum of Rs. 43,344 being the market value of the said five properties be included in the principal value of the estate which was enhanced accordingly.
( 4 ) BEING aggrieved, the accountable person preferred an appeal against the order of the Assistant Controller of Estate Duty before the Appellate Controller. It was submitted before the Appellate Controller on behalf of the accountable person, inter alia, that only the value of the properties to the extent of the benefit reserved by the deceased for himself and not the entire value of the properties should have been included in the principal value of the estate. In support of such contention, a decision of this court in the case of Rashmohan Chatterjee v. CED [1964] 52 ITR (ED) 1 was cited.
( 5 ) THE Appellate Controller accepted the contention of the assessee and following the decision in the case of Rashmohan Chatterjee [1964] 52 ITR (ED) 1, as also another decision of the Andhra Pradesh High Court in the case of Mohammed Bhai v. CED [1968] 69 ITR 770, held that only the value of the properties to the extent of the benefit reserved by the deceased for himself should be included in the principal value of the estate. As the deceased was entitled to receive Rs. 600 per year out of the net income from the properties given in gift, the benefit should be computed by multiplying the said assessment by a factor of 16. The addition to the estate was computed at Rs. 9,600.
( 6 ) AGAINST the order of the Appellate Controller, the Revenue filed an appeal before the Income-tax Appellate Tribunal. It was contended on behalf of the Revenue before the Tribunal that there was no dispute that Section 10 of the Estate Duty Act, 1953, was applicable in the facts and, therefore, the entire value of the said properties given in gift should have been included in the principal value of the estate. The decision in the case of Mohammed Bhai [1968] 69 ITR 770 (AP), was sought to be distinguished and reliance was placed on a decision of the Allahabad High Court in Shrimati Sarwari Kahtoon v. CED [1970] 78 ITR 719. The Revenue also cited and relie
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
