Property passing on death includes property passing either immediately or after an interval, either certainly or contingently, and either originally or by way of substitutive limitation.

JUDGMENT :

R.N. Misra, C.J. - Upon the assessee's application u/s 64(2) of the E.D. Act, 1953, this court by order dated January 11,1979, called upon the Appellate Tribunal, Cuttack Bench, to state a case and refer the following questions for the opinion of the court:

(i) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the inclusion of the value of the house property at Rourkela is legal, even though the title to the land was defective and the property was not free from encumbrances?

(ii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in fixing the valuation of the property at a multiple of 13 times the net rental, even though, admittedly, the department had fixed the valuation at a much lower figure for the purpose of wealth-tax?

One Joginder Singh along with Jai Singh took a lease of certain lands located at Rourkela from Birabar Naik and others who happened to be members of the Scheduled Tribes and the lease was for a term of 99 years. Smt. Prakash Kaur purchased a portion out of the leasehold from Joginder Singh during her lifetime and constructed a building on the said property between 1966 and 1968 by investing Rs. 39,618. The original lease in favour of the vendors and the sale in favour of Smt. Prakash Kaur were not evidenced by any registered document. Smt. Prakash Kaur died on October 22, 1974, and the assessee, her husband, being the accountable person, came to be assessed to estate duty. The Asst. Controller included the value of the house as a part of the estate of the deceased and estimated it at Rs. 80,416 on the basis of sixteen times the net rental income receivable from the property. The Appellate Controller upheld the order of the Asst. Controller. The assessee thereupon preferred a second appeal to the Tribunal and maintained that the deceased had acquired no valid title to the property in the absence of a registered document and had no right to transfer the same. Mere possession did not tantamount to ownership. Therefore, the property was not includible in the estate of the deceased. Alternatively, it was claimed that the valuation determined was excessive particularly when the property was not free from encumbrance and there was no justification for adopting a valuation different from the valuation taken for wealth-tax purposes for the same period.

2. The Tribunal found that the deceased was in peaceful possession of the land purchased by her from her brother, Joginder Singh, and had raised a construction five to six years prior to her death. The property had been fetching a sustained rental in the hands of the deceased which was being shown for purposes of wealth-tax and income tax. The Tribunal also took note of the fact that the property had been mutated in the municipal records in her name and she was subjected to holding tax for the property. Relying on the ratio of the decision of the Supreme Court in the case of Controller of Estate Duty, Gujarat Vs. Hussainbhai Mohamedbhai Badri the Tribunal came to hold that the deceased had interest in the property which did pass on her death to others entitled to succeed thereto. For the purposes of the statute "Property passing on the death of the deceased" has to be taken into account and the beneficial interest held by the assessee did pass upon her death to others in accordance with the personal law of the deceased. The Tribunal, therefore, held that the house property was a part of the estate of the deceased liable to be taxed under the Act.

3. So far as the estimate of valuation was concerned, the Tribunal held that, in view of the defective title to the land upon which the house had been raised, it would be reasonable to estimate its value by multiplying the rental by thirteen times instead of sixteen times. The assessee then contended before the Tribunal by filing a miscellaneous application that there was a defect in the appellate order, inasmuch as the Tribunal omitte