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Yelukuru Satyanarayana Vs. Assistant Controller of Estate Duty, Kurnool - Court Judgment

LegalCrystal Citation
SubjectOther Taxes
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Petitioner No. 23 of 1960
Judge
Reported inAIR1962AP107; [1961]43ITR51(AP)
ActsEstate Duty Act, 1953 - Sections 3(1), 5(1) and 6; Consitiution of India - Article 226
AppellantYelukuru Satyanarayana
RespondentAssistant Controller of Estate Duty, Kurnool
Appellant AdvocateN. Rammohan Rao, Adv.
Respondent AdvocateC. Koondaieh, Adv.
Excerpt:
other taxes - estate duty - sections 3 (1) and 5 (1) of estate duty act and article 226 of constitution of india - a bequeathed his property to child that would be adopted by his wife and created right to maintenance right to wife over property - respondent demanded estate duty for property at the hands of adopted son - property vested on petitioner at time of adoption - adoptee mother held property as guardian of petitioner during his minority and mutated her name after he obtained majority - held, in such circumstances estate duty cannot be charged on property. - - 10 of the act a gift whenever made shall be deemed to pass on the donor's death unless the following conditions are satisfied: commissioner of stamp duties, by the judicial committee of privy council, 1958 ac 435: (1959)..........restrining the estate duty officer, kurnool from proceeding to pass an order under sec. 55 of the estate duty act and assessing the estate of the petitioner's adopted mother lakshmi devamma as one which passed on her death to the petitioner.(2) the petitioner is the adopted son of ramaih chetty who died on 6-11-1918 leaving his widow lakshmi devamma. by and under a will dated 6-11-1918 the deceased authorised his widow to adopt a son who from the date of adoption will be entitled to his properties. pursuant to this authority, the widow lakshmi devamma adopted the petitioner on 9-12-1945 having performed the ceremonies of adoption and executed a registered adoption deed on the same day evidencing this fact. this adoption was challenged by revisioners and utimately the matter went up to.....
Judgment:
ORDER

(1) This is a petition for the issue of a writ of prohibition restrining the Estate Duty Officer, Kurnool from proceeding to pass an order under Sec. 55 of the Estate Duty Act and assessing the estate of the petitioner's adopted mother Lakshmi Devamma as one which passed on her death to the petitioner.

(2) The petitioner is the adopted son of Ramaih Chetty who died on 6-11-1918 leaving his widow Lakshmi Devamma. By and under a will dated 6-11-1918 the deceased authorised his widow to adopt a son who from the date of adoption will be entitled to his properties. Pursuant to this authority, the widow Lakshmi Devamma adopted the petitioner on 9-12-1945 having performed the ceremonies of adoption and executed a registered adoption deed on the same day evidencing this fact. This adoption was challenged by revisioners and utimately the matter went up to High Court and was decided in favour of the petitoner holding the adoption and the deceased Lakshmi Devamma, adopted mother, as guardian of the minor was looking after the petitioner and his properties till he became a major in 1953 in which year she made over the properties to him and also transferred the houses which were in the name of her late husband. She has thus given charge of the estate of her husband to her adopted son and demanded and obtained a maintenance of Rs. 200/- per mensem which was paid by the petitioner will the date of her death on 17-4-1959.

(3) The Estate Duty Officer, Kurnool, issued a notice to the petitioner on 4-11-1959 under Sec. 55 of the Estate Duty Act treating the petitioner as a person accountable for the estate duty of the deceased Lakshmi Devamma. This notice is presumably under Sec. 53 of the said Act. In anewer to this notiice, the petitioner submitteed an application setting out the history of the family and his adopted father and that the widow had no estate or any other property which falls under the purview of the Estates Duty Act. Consequently, the provision of the Estate Duty Act are not attracted.

(4) Having thus challenged the jurisdiction of the Estates Duty Officer, the petitioner filed the return forms giving an account of all the estate as it stood on 16-4-1959 for the information of the officer. In that statement the petitioner mentioned that the deceased Laskhmi Devamma had jewellery worth Rs. 14,100/-. After this return to the notice was filed, the Estate Duty Officer issued another notice on 14-12-1959 asking the petitoner stated that Lakshmi Devamma adopted him in 1945 to the late Ramiah Chetty; that she was in possession of cash, accounts and other properties and wanted Rs. 200/- to be paid to her per mensem towards her expenses which he had paying regularly.

(5) The petitioner also mentioned that all the houses properties which were in the name of Lakshmi Devamma were mutated in his name in the year 1953. There were disputed with regard to adoption. There were also suits in High Court which were decided in August 1952, and as such mutation of the properties could not take place till 1953. On a consideration of this statements made by him stating the legal position thus:

The adoption by the deceased was a voluntary act resulting in a disposition of property. This amounts to a gift as contemplated under the Estate Duty Act. Had she not adopted, the entire estate would have passed on her death under Estate Duty Act.Thus by one voluntary act of adoption she made disposition of property.

(6) Under Sec. 10 of the Act a gift whenever made shall be deemed to pass on the donor's death unless the following conditions are satisfied:

(a) bona fide possession and enjoyment should have been immediately assumed by the donee;

(b) then forward it shold be retained to the entire exclusion of the donor. It cannot matter whether it is for consideration or otherwise. The deceased is the one person in the world with whom the donee may not have any association whatever;

(c) there should be no benefits to the donor by contract or otherwise of whatsoever kind.

(7) The section looks not to the question of legal right but to the factual position. The sole question is one of fact - was the donor excluded? If she was not excluded, it is not relevant to ask why she was not excluded.

(8) The Section Permits:

(a) the donee to ratain the possession and enjoyment to the exclusion of possession and enjoyment to the exclusion of possession and enjoyment, of, or benefits to, any one, including the donor;

(b) he may relinquish the possession and enjoyment but not to the donor;

(c) he may retain the possession and enjoyment but may confer benefit but not on the donor. The legal position has been finally decided in C. J. Chick v. Commissioner of Stamp Duties, by the judicial Committee of Privy Council, 1958 AC 435: (1959) 37 ITR 89.

(9) In the instant case, Lakshmi Devamma who was the donor had enjoyed benefits from the property will her end. Theefore even if you prove condition (a) above, the remaining condition (b) and (c) are not fulfilled, and therefore estate would be caught under Sec. 10 of the Estate Duty Act.

(10) Please state your objection, if any, to the inclusion of property volutarily disposed of by Lakshmi Devamma by the act of adoption as estate deemed to pass on the death of Lakshmi Devamma. The information may be filed to reach me on or before 28-12-1959.'

(11) The learned Advocate for the Department raises a preliminary objection as to the maintainability of this petition on the gorund that this is not the final adjudication of the matter and that the petitioner was merely called upon a file his objections. In any case he contends that the Estate Duty Act itself provides for alternatiive remedy of an hierarchy of appeals. This contention is ontested on the plea that where there isi a total inherent back of jurisdiction the availability of an alternative remedy is not a good ground for dismissing the petition. In my view, it is true that existance of an alternative remedy would entitle this court in exervise of its extraordinary jurisdiction under Art. 226 of the Constitution settled that where an authority proposes facie it lacks the existence of an alternative remedy has not been held to be a bad against the maintainability of this Petition. In Sri Lakshmindra Theetha Swamiar v. Commr. H. R. E. Board, : AIR1952Mad613 Satyanarayana Rao and Rajagopalan JJ. dealing with a similar question observed as follows:

In deciding a question, whether a writ of prohibition should issue or not, the existence of an alternative remedy is, in our opinion, an irrelevant consideration when the complaint is that an inferior tribunal is exceeding its jurisdiction not vested in it by law. If the tribunal is permitted to exercise that jurisdiction which is objected to, if it exericses it wrongly, the mischief would be done, before the alternative remedy is availed of. It is unnecessary to insist upon a party complaining that he should first suffer and submit himself to the jurisdiction which is being wrongly exercised or is wrongly exceeded and then take advantage of the alternative remedy'. It is unnecessary to consider serveral other decisions in the light of the recent judgment of the Supreme Court in Calcutta Discount Co. V. Income tax Officer, : [1961]41ITR191(SC) where the majority and minority view was uniform on this matter. Das Gupta J., during the course of the majority judgment observed at p. 380 as follows: Mr. Sastri next pointed out thata at the stage when the Income-tax Officer issued the notices he was not acting judicially or quasi-judicially and so a writ of certiorari or prohibition cannot issue. It is well not settled however that though the writ of prhibition or certiorari will not issue against an executive authority, the High Court have power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such atcion of an executive authority acting without jurisdiction subjects or is ikely to submit a person to lengthy proceedings and unnecessary harassment, the High 'courts, it is well settled, will issue appropriate order or directions to prevent such consequences

(12) Shah, J. Who in the minority took a similar view observing at page 386 as follows:

'If the conditions precedent do not exist, the jurisdiction of the High Court to issue high prerogative writs under Art. 226 of the Constitution to prohibit aaction under the notice may be exercised. But if the existence of the conditions is asserted by the authority entrusted with the power and the materials on the record prima facie support the existence of such conditions, an enquiry whether the authority could not have rerasonably held the belief which he says he had reason to hold and did hold, is, in my judgment, barred'. Hidayatullah, J., the other dissenting judge did not express any view on the matter. Form the above observations of their Lordships, it is abundantly clear that applications under Art. 226 of the Constitution either for the issue of a writ of certiorari or for prohibition will be entertained where ther is a total lalck of inherent jurisdiction for any authority constituted to act under the provisions of that statute. The preliminary objection, in my view, therfore, has no foce inasmuch as the petitionere had already objected to the jurisdiction of the Estate Duty Officer and had categorically asserted that the provisions of the Estate Duty Act are not attracted to his case. The final notice of 23-12-1959 issued by the Estate Duty Officer is one which assumed jurisdiction under the Act and declared his intention to make an assessment on a certain view of the Hindu Law which entitled him to treat the handing over of possession of the properties by Lakshmi Devamma in 1953 to the petitioner as a gift which gift he condisered as invalid on several grounds and treating the properties as those of Lakshmi Devamma which passed on her deaath to the petitioner.

(13) Before I deal with the position under the Hindu Law it is necessary to notice the relevant provisions of the Estate Duty Act viz. Secs. 5, 6 and 3.

Section 5: In the case of every person dying after the commencement of this Act, there shall, save as hereinafter expressly provided, be levied and paid upon the principal value ascertained as hereinafter provided of all property, settled or not settled, including agricultural land situate in the States specified in the schedule to this Act, which passes on the death of such person, a duty called 'estate duty' at the rates fixed in accordance with Sec.35.

Sec. 35.

Section 6: Property which the deceased was at the time of his death competent to dispose of shall be deemed to pass on his death.

Section 3(1)(a): A person shall be deemed competent to dispose of property if he has such an estate or interest therein or such general power as would if he were sui juris, enable him to dispose of the property'.

(14) The taxing section attracts properties which pass on the death of a person. Apart from the property actually passing that propeerty also is deemed to pass on his death according to Sec. 6 of the Act which the deceased at the time of his death was competent to dispose of in accordance with the definition under Sec. (3)(1)(a) i.e., property in which he has such an interest or such general power as would, if he were sui juris would have enabled him to dispose it of. The question therefore is whether Lakshmi devamma had an estate or interest in the property which is sought to be made liable and which could be disposed of in here life time if she wanted. The competence of Lkshmi Devamma tgo deal with the subject matter of this writ petition would have to be determined according to principles of Hindu Law which are applicable to the parties.

(15) It is a well accepted principle of that law whether in respect of coparcenary property or separate property of a Hindu Joint Family or an individual that it devolves by survivorship or succession as the case may be upon surviving members of the coparcenary or heirs. If the deceased has no sons or there are no coparaceners of the joint family, the widow takes life interest. As long as there is in existence a widow in a joint family, there is always a potential prospect of expansion of the joint family, or of an heir to the deceased by a subsequent valid adoption made by her in exercise of an authority given to her by her husband. The result of adoption would be to relate back the vesting of the estate in him from the date of the death of the deceased. This proposition is subject to certain limitations which need not be examined in this case as the mattere here is a simple case of adoption where there is no vesting in some other person.

(16) No doubt the proposition of law which is not controverted by the learned Advocate for the Department is stated in Mulla's Hindu Law (12th Edn.) at pages 667, 669 and 670. A valid adoption by the widow if her husband was divided at the time of his death may divest an estate of inheritance. It may, if her husband was a member of a joint family governed by the Mitakshara Law divest rights acquired by survivorship. Where a widwom adopts, one of the objects of adoption is to perpetuate the adoptive father's name by securing an heir and when a member of a joint family governed by the Mitakshara law dies and the widow validly adopts a son to him, a coparcenary interest in the joint property is immediately created by the adoption co-extensive with that which the deceased co-oparcener had, and it vests at once in the adopted son. At page 670 in paragraph 507 Mulla states in respect of adopted son's rights from the date of adoption thus:

The rights of an adopted son arise for the first time on his adoption. He may, by virtue of his rights as adopted son, divest other persons in whom the property vested after the death of the adoptive father, but all lawful alienations made by previous holder would be binding on him. His right to impeach previous alienations would depend upon the capacity of the holder who made the alienations as well as on the nature of the action of alienation. Whe the holder was a male who had unfettered right of transfer, e. G., the last surviving member of ajoint family, the adopted son could not impeach the transfer. In case of females who had restricted rights of transfer even apart from any adoption, the transfers would be valid only when they are supported by legal necessity

(17) In my view it is unnecessary to consider any authorities on this point as the propositions are clear. It is equally well established that a widow once she has adopted has no right to alienate property of her deceased husband as under the law that property vests in the adopted son. In view of these clear principles of Hindu Law, there is absolutely no doubt that after the adoption of the death of Ramiah Chetty and the widow has no disposing power over the property on and from the date of adoption. The petitioner's statement that his mother was looking after cash and property during his minority is consistent with her looking after the property during the minority of the petitioner. She in fact handed over that property and also mutated her name in favour of the petitioner on the petitioner becoming a major.

(18) In so far as the estate of Ramiah Chetty is concerned which vested in the petitioner, it could not be said that this property is one which the widow was competent to dispose of or had interest therein, and that passed on her death. If there is any property as admitted by the petitioner himself to the extent of jewellery or otherwise which belongs to Lakshmi Devamma over which she had power of disposing, the estate duty authorities are perfectly entitled to proceed against the same under the provisions of the Estates Duty Act.

(19) In this view, the notice in so far as it affects the estate of Ramiah Chetty which vested in the petitioner as adopted son is quashed and a writ of prohibition be issued restraining the Estate Duty Officer from proceeding with the proposed assessment. This petition is allowed with costs. Advocate's fee Rs. 100/-.

(20) Petition allowed.


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