Ambrose J:

This was an application by trustees of the will and estate of Syed Ahmed bin Abdulrahman Alsagoff, deceased, for the determination of certain questions arising in the administration of the estate and concerning the incidence of estate duty paid on the deaths of income beneficiaries.

The will was made on 30 December 1868 and the testator died on 27 March 1875. The relevant provisions of the will are these. The income from the testator's freehold and leasehold property is to be divided annually amongst the testator's wife and children and their descendants according to the shares prescribed by Mohammedan law. The income is to be so distributed during the lifetime of the last survivor of his children and more remote issue living at his death and for twenty years after the death of such survivor. And then the property is to be sold and the proceeds of sale are to be divided amongst the several persons then entitled to receive the income in proportions specified by Mohammedan law.

I understand the testator's intention as to income to be this. The share of a male child is to be twice that of a female child. After the death of a child, the share payable to the child is to be payable to his or her children, a male child's share being twice that of a female child, and so on from generation to generation. If a descendant of the testator dies without children, then his or her share is to devolve upon other descendants of the same degree.

It is not disputed that the date of distribution of the corpus is 28 May 1961. It is to be borne in mind that the persons entitled to share in the corpus are the persons entitled to share in the income immediately before the date of distribution of the corpus.

Estate duty has been paid under the Estate Duty Ordinance on the death of each of the income beneficiaries who died before 28 May 1961. By an order made by the Court on 16 November 1927, in Originating Summons No. 84 of 1920 the trustees were given leave to raise such estate duty in the manner suggested in the joint opinion of Counsel referred to in the order. By a further order made by the Court on 25 March 1949, in Originating Summons No. 51 of 1949 the trustees were given leave to advance capital monies for the purpose of paying such estate duty. In the majority of cases, the trustees raised such estate duty by charging the share of the corpus passing on the death of the respective income beneficiaries by way of mortgage. The interest payable on all such mortgages and advances of capital monies made by the trustees was deducted from the income to which the successors of the respective deceased income beneficiaries became entitled before any distribution of income was made to such successors.

The main question to be decided by me was whether such estate duty is to be borne by

(1)the corpus of the testator's estate, or

(2)that portion of the corpus which passed or is deemed to have passed upon the deaths of the respective income beneficiaries.

The beneficiaries now entitled to share in the corpus of the estate are more than ninety in number. Mr. CH Smith represented beneficiaries who support the first view. Mr. RH Green represented beneficiaries who support the second view.

Section 6 of the Estate Duty Ordinance provides

.... there shall be levied and paid upon the principal value .... of all property settled or not settled which passes on the death of any person a duty, called 'estate duty. ....'

Section 7(b) of the Ordinance provides:

Property passing on the death of the deceased shall be deemed to include the property following, that is to say:- ...... ......

(b)property in which the deceased or any other person had an interest ceasing on the death of the deceased, to the extent to which a benefit accrues or arises by the cesser of such interest; ...........

Section 6 of the Ordinance corresponds to s. 1 of the Finance Act, 1894; and s. 7(b) of the Ordinance corresponds to s. 2(1)(b) of the Act.

As was stated