Property acquired in the name of a benamidar is deemed to pass on the benamidar's death for the purposes of estate duty, even if the consideration for the property was paid by the real owner.

1. This reference has arisen under the Estate Duty Act, 1953 (Act No. 34 of 1953) (hereinafter to be refered to as "the Act"). The Income-tax Appellate Tribunal, Delhi Bench C, has referred the following question of law for opinion:

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in excluding the value of the property in question from the assessment holding that the deceased was not competent to dispose of the same and that it did not pass on her death ?"

2. So fat as the facts are concerned there is no dispute, though the learned counsel for the accountable person sought to contend that there was some controversy as to facts. The dispute relates to the estate of Savitri Devi. She died on the 17th of November, 1963. On the date of her death, there were two properties which stood in her name. These properties were evaluated at Rs. 1,63,200 by the Assistant Controller of Estate Duty.

3. The accountable person is the husband of the deceased, Shri M. L. Manchanda. The property is situate at Faridabad. Initially, it consisted of two plots, Nos. 5-C/1 and 5-C/2, measuring 800 square yards. These plots were allotted to the husband subject to the approval of the development board. The allotment was approved by the board.

4. Later on, the accountable person requested the Faridabad Development Board to transfer the said plots to his wife. This request was accepted subject to the condition that the sum of Rs. 1,408-3-0 be first deposited. This amount was so deposited and by his letter dated 30th April, 1956, the accountable person requested that the said plots be transferred in the name of his wife. Later on, the Assistant Settlement Officer addressed a communication to the lady if she wanted the leasehold rights to be converted into freehold rights. This communication was accepted and the amount demanded was paid by the accountable person, who, later on, with his own money constructed a house of which only the ground floor portion was initially put up. This building was then let out to the Oriental Bank of Commerce Ltd. at a rent of Rs. 600 per month by the accountable person and, with the amounts so recovered, it is stated that the accountable person constructed the upper storey as well. The income of rent was also taxed in the hands of the accountable person for the assessment years 1961-62 and onwards. There is also a declaration by the accountable person dated 1st of November, 1963, to the effect that he is the owner of the plots as well as the house, though they stood in the name of his wife. This declaration is signed by the wife and also the son. On the basis of this declaration some moneys were advanced by the bank.

5. On the death of the wife, as already stated, the property which stood in her name and of which admittedly the real owner was the husband was sought to be included in the estate of the deceased for purposes of the levy of estate duty under Section 5 of the Act. The plea of the husband that he was the real owner of the property and the wife was a mere benamidar and so the property could not be treated as that of the wife was rejected on the basis of Section 6 of the Act which is in the following terms :

"Property which the deceased was at the time of his death competent to dispose of shall be deemed to pass on his death."

6. An appeal by the accountable person to the Zonal Appellate Controller of Estate Duty met with no success. A further appeal was filed to the Income-tax Appellate Tribunal under Section 63 of the Act. The Tribunal allowed the appeal and held that the case did not fall under Section 6 of the Act. An application was made to the Tribunal for a statement of the case to this court under Section 64(1) of the Act. This application was granted and the question of law already referred to has been referred.

7. The contention of the learned counsel for the department is that the Tribunal has gone wrong in holding that the property in dispute is not to be dee