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Controller of Estate Duty Vs. Estate of Late Rani Ranganayakamma (by Accountable Persons) - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAndhra Pradesh High Court
Decided On
Case NumberCase Referred ESD. No. 3 of 1972
Judge
Reported in[1976]103ITR586(AP)
ActsEstate Duty Act, 1953 - Sections 2(16), 7 and 36; Hyderabad (Abolition of Jagirs) Regulation - Regulation 1358F; Hyderabad Jagirs (Commutation) Regulations - Regulation 1359F
AppellantController of Estate Duty
RespondentEstate of Late Rani Ranganayakamma (by Accountable Persons)
Appellant AdvocateP. Rama Rao, Adv.
Respondent AdvocateB.V. Subbarayudu and ;S.N. Sanghi, Advs.
Excerpt:
direct taxation - enhanced compensation - sections 2 (16), 7 and 36 of estate duty act, 1953, regulation 1358f of hyderabad (abolition of jagirs) regulation and regulation 1359f of hyderabad jagirs (commutation) regulations - 'jagir' land of deceased taken over by government - compensation was fixed and subsequently enhanced after death of deceased - estate duty was levied according to enhanced compensation - appeal preferred against assessment - deceased person entitled to receive commutation sum whenever fixed in future - held, assessment as per enhanced compensation valid. - - , as well. so, as per the requirement of section 5(2), the jagirdar is required to furnish the jagir administrator with an account of revenue and expenditure relating to the jagir in the year of transfer and.....sambasiva rao, j.1. rani ranganayakamma left behind her considerable properties when she died on april 9, 1955. she also owned jagir lands, which had been taken over by the government. the jagir commutation amount was also tentatively fixed at rs. 5,21,241 payable in 40 instalments from april 1, 1950, to march 31, 1960. she received before her death 19 instalments, the total of which was rs. 2,47,592. nearly four years after her death, i.e., in 1959, another award was passed on the initiative of her legal representatives estimating the compensation at rs. 9,30,559. there was yet another revision of the compensation amount on october 9, 1961, when it was fixed at rs. 10,16,959 and it was payable from december 23, 1961.2. when the matter came up for levying estate duty on properties.....
Judgment:

Sambasiva Rao, J.

1. Rani Ranganayakamma left behind her considerable properties when she died on April 9, 1955. She also owned jagir lands, which had been taken over by the Government. The jagir commutation amount was also tentatively fixed at Rs. 5,21,241 payable in 40 instalments from April 1, 1950, to March 31, 1960. She received before her death 19 instalments, the total of which was Rs. 2,47,592. Nearly four years after her death, i.e., in 1959, another award was passed on the initiative of her legal representatives estimating the compensation at Rs. 9,30,559. There was yet another revision of the compensation amount on October 9, 1961, when it was fixed at Rs. 10,16,959 and it was payable from December 23, 1961.

2. When the matter came up for levying estate duty on properties belonging to her which passed on her death, the Deputy Controller of Estate Duty calculated the compensation amount on the basis of Rs. 10,16,959 and levied duty on Rs. 6,30,628 after making the necessary deductions. The accountable persons contended before him that duty was leviable only on the balance of Rs. 5,21,241, which remained unpaid by the time of the death of the deceased. The Deputy Controller rejected this plea holding that the commutation amount was fixed only provisionally as stated by the assistant examiner of accounts and it was revised twice, the latest amount of compensation being Rs. 10,16,959. So, according to his decision, this amount should form the basis for levying estate duty. The Appellate Controller affirmed this view and the accountable persons carried the matter in appeal before the Income-tax Appellate Tribunal, Hyderabad Bench. The Tribunal allowed the appeal and held that the balance amount due to the deceased as on the date of her death was only Rs. 2,73,649 and that alone should be treated as having passed on to the heirs on her death. At the instance of the department it referred the following question for the decision of the High Court:

'Whether, on the facts and in the circumstances of the case, the value of the amount to be included on the account of the jagir commutation would be the balance of the present amount due of Rs. 2,73,649 only or any higher amount subsequently received after the death of the deceased?'

3. There is no reference in regard to the other assets of the deceased person.

4. We may briefly recount the reasoning of the Tribunal in arriving at its decision. When Rani Ranganayakamma died, she was held to have been entitled to a compensation of Rs. 5,21,241. There is no evidence that she either disagreed with that amount or objected to the payment or asked for any enhancement. When she did not take any action she would not have got any extra amount. She knew that she would get only the amount which had been decided and nothing more. What is to be seen is the actual amount which the deceased had on the date of death. The fact that the amount was subsequently increased to Rs. 10,00,000 and odd did not mean that the deceased would have been entitled to receive that amount. The enhancement was in fact the result of certain actions taken by the heirs of the deceased after her death. On her death, the estate was taken over by the court of wards and one or other of the heirs laid claim to enhancement of the compensation, which the deceased would have received and this claim was laid after searching out the records and other materials from the court of wards and from Government offices. Thus, it was due to the efforts of the heirs, the increased award was given. If an asset left by the deceased enhanced in value subsequent to the death or on account of the efforts of the heirs, neither the asset nor the enhanced value could be regarded as properties passing on the death of the deceased. The only amount she was entitled to get and indeed she knew that she would be entitled to get as compensation for the jagir at the time of her death is only Rs. 5,21,241. Consequently, the unpaid balance out of this amount alone can be taken for reckoning the estate duty on this asset.

5. Sri P. Rama Rao, appearing for the department, challenges this view. The bone of his contention is that whatever enhancement that might have been effected in the amount of compensation, earlier or later, is only referable to the jagir, which was taken over from the deceased and which was in law treated as her property. The subsequent changes in the compensation even at the instance of the heirs cannot alter the fact that the enhanced compensation also is for the jagir, which belonged to the deceased and which was taken from her. So, estate duty is leviable on the amount now determined. On the other hand, Sri B. V. Subbarayudu, for the accountable persons, endeavours to support the view of the Tribunal arguing that the enhancement was due to the efforts of the heirs and cannot, therefore, be treated as belonging to the deceased. The market value of the compensation as on the date of the death of the deceased should form the basis for levying the duty and if that was so on April, 9, 1955, it could have fetched in the open market only Rs. 2,73,649, the balance of commutation amount, which remained unpaid by that time.

6. The reference necessarily raises the question as to what is the property that passed on the death of the deceased and whether the compensation enhanced subsequent to her death on more than one occasion is referable to that property. Or, could the enhancement be treated as an improvement made to the property by the heirs or something acquired by them by their own efforts? The key for answering these questions has to be found not only from the Estate Duty Act but also from the Hyderabad (Abolition of Jagirs) Regulation, 1358 F., and the Hyderabad Jagirs (Commutation) Regulation, 1359 F., as well. The Tribunal has not referred at all to the provisions of these Regulations. Section 5 of the Estate Duty Act is the charging provision, which provides for levying estate duty on property which passes on the death of a person. From Section 6 onwards, the Act describes the nature of the property, which is deemed to pass. Section 6 says that a property which the deceased was, at the time of his death, competent to dispose of, shall be deemed to pass on his death. Section 7 states that property in which the deceased or any other person had an interest, which ceases on the death of the deceased, shall be deemed to pass on the death of the deceased to the extent to which a benefit accrues or arises by the cesser of such interest. While defining the expression 'property', Section 2(15) says that it includes any interest in property, movable or immovable. Clause (16) of the same section defines 'property passing on the death' saying that it includes 'property passing either immediately on the death or after any interval, either certainly or contingently, and either originally or by way of substitutive limitation'. From the above provisions it can be seen that if the deceased was, at the time of his death, competent to dispose of some asset or right, it is deemed as passing on his death. 'Property' includes also an interest in property, movable or immovable. As per Clause (16) of Section 2, such property need not necessarily pass immediately on the death of the deceased person; it may pass even after an interval. Further, it need not pass certainly; it can pass contingently 'also. Still further, it can pass either originally or by way of substitutive limitation.

7. Now let us see what is the position in regard to jagirs, in respect of which the present claim arises. They were abolished by the Hyderabad (Abolition of Jagirs) Regulation, 1358 F., and that Regulation came into force on 15th of August, 1949. Section 5(1) requires the Military Governor to appoint a date for the transfer to Government of the administration of jagirs. We are told that in the case of the present jagir, the date appointed for its transfer is October, 1, 1949. Sub-section (2) of the same section enjoins upon the jagirdar to make over the management of the jagir to the jagir administrator and to furnish him with an account of the revenue received and expenditure incurred on account of the jagir in the current or, if the jagir administrator so requires, in the immediately preceding year of account, in so far as such revenue and expenditure are attributable to that year. 'Year of account' according to Section 2(i) means the Fasli year, or where the accounts of a jagir are maintained according to a year of another era, the year according to that era. So, as per the requirement of Section 5(2), the jagirdar is required to furnish the jagir administrator with an account of revenue and expenditure relating to the jagir in the year of transfer and if he is so required, for the immediately preceding year as well. Section 6 declares that from the appointed date, the jagir is included in the Diwani and it means that it ceases to have an independent or separate existence. Sub-section (8) of Section 6 has a very material bearing on the question we are called upon to answer. It says ;

'If a jagirdar or hissedar dies, his share in the net income of the jagir, including his share in the Haq-e-Intazam, shall devolve in accordance with his personal law.'

8. Whatever might have been the position in regard to succession to jagirs earlier, we are told that every jagir ceased on the death of the holder and it was regranted to the heirs--the Abolition Regulation declares that when a jagirdar dies, his share in the net income of the jagir shall devolve in accordance with his personal law. It means that in the present case, the share of Rani Ranganayakamma in the net income of the jagir devolved, on her death, on her heirs, in accordance with the Hindu law of succession, which is her personal law. In other words, the heirs, who are now the accountable persons, got the right to the net income of the jagir only as heirs of the deceased person and not in their individual or personal capacity. Section 8 provides for payment to the Government of the expenses incurred for administration of the jagir. A table included in the section indicates the percentage of deduction from the gross revenue towards the expenses for administration. Section 10 provides for payments to the jagirdar from the balance that remains after deduction of the administrative expenses. Section 20 provides for appeals against any order passed by the jagir administrator to the Government or to such authority as it may appoint.

9. The Hyderabad Jagirs (Commutation) Regulation, 1359 F., came into operation on 25th January, 1950. Its preamble says that it was enacted to provide for the termination of interim allowances payable under the Abolition Regulation and for the determination of the terms of commutation of jagirs. Until the commutation is finally determined, interim allowances would be paid to the jagirdars as per the Abolition Regulation. Section 3 of the Commutation Regulation lays down the method for calculation of the commutation sum. It reads :

'The commutation sum for every jagir shall be the sum resulting from the multiplication of the basic annual revenue of the jagir calculated in accordance with Section 4 by the figure specified in the appropriate entry in the second column of the annexed table.

Provided that for any jagir for which the commutation sum so calculated would be less than the alternative sum specified in the appropriate entry in the third column of the annexed table the commutation sum shall be the alternative sum so specified.'

10. The annexed table in the section is not material. So the method for determining the commutation sum is fixed by the section as multiplication of the basic annual revenue of the jagir. That basic annual revenue has to be calculated in accordance with Section 4 by the figures mentioned in the second column of the annexed table. Section 4 states that in order to arrive at the basic annual revenue, the gross basic sum shall firstly be ascertained in accordance with Sub-section (2) of that section. Thereafter certain deductions are provided in the following sub-clauses. Subsection (3) lays down that:

'The gross basic sum shall be the average annual gross revenue of the jagir for the ten years opening with the year 1347 F. and ending with the year 1356 F.'

11. The proviso thereto is not important for the present consideration. The commutation sum has to be determined by the jagir administrator or by an Officer authorised by him, as per Section 5(1). Sub-section (2) of Section 5 enables the person aggrieved by such determination to prefer an appeal to the Government, which are empowered to either confirm the determination or revise it, in such manner as they think fit. Subject to the result of such an appeal, the determination of a commutation sum under Section 5 is declared to be final, as is provided in Sub-section (3). Once the commutation sum is fixed, payment of interim allowances is stopped. The rules made under the Commutation Regulation provide for the manner of paying the sum in instalments.

12. In the light of the above mentioned provisions of the relevant enactments the following position emerges. The right to get compensation devolved on the accountable persons only as heirs of the deceased Rani Ranganayakamma. Excepting as heirs, they have no right, title or interest in the commutation sum. The right or interest of the deceased person to receive the commutation sum is also. 'property' within the meaning of the Estate Duty Act. The deceased person was competent to dispose of that right or interest at the time of her death within the meaning of Section 6 of the Act, for under a will or agreement she could dispose of her right to receive the commutation sum. She was, further, fully competent to dispose of that right without mentioning the figure and by saying that whatever she was entitled to get as commutation sum, she was disposing of. As is clear from Section 2(16) of the Estate Duty Act, the passing of the property need not necessarily be immediately on the death of the deceased person ; passing can take place even after an interval. It need not even pass certainly; it may pass contingently as well. This feature is very pertinent to the present question because in the contingency of the commutation sum being enhanced even after the death of the deceased, the heirs will be entitled to that enhanced sum also. The two enhancements made subsequent to the death of the deceased are wholly referable to the right of the deceased person to get the commutation sum. When she was alive, she alone was entitled to receive it. It was only on her death the right devolved on her heirs under the personal law. Therefore, there cannot be any doubt, whatever, that the enhancements made or effected subsequent to the death of the deceased person are clearly in respect of the jagir and the right to get compensation therefor owned and left by the deceased person. The commutation sum, it is also pertinent to recall, is the sum resulting from the multiplication of the basic annual revenue of the jagir. For such calculation, the gross basic sum is first ascertained. The gross basic sum is the average annual gross revenue of the jagir for the ten years opening with the year 1347 F. and ending with the 1356 F. This period of ten years, which is material for arriving at the gross basic sum, was before the transfer of the jagir itself. There is no other criterion excepting what is contained in sections 3 and 4 of the Commutation Regulation for calculating the commutation sum. It consequently and necessarily follows that the enhancements made in 1959 and 1961 could have been made only with reference to the gross basic sum and the method of calculation, laid down by sections 3 and 4 of the Commutation Regulations. It may be that the legal heirs of the deceased laid claims to enhancement of compensation after searching out the records and other materials from the court of wards and from the Government offices, as pointed out by the Tribunal. In fact the contention of the accountable person before the Tribunal, as seen from the statement of case, was that in fact subsequent to the death of the deceased, her legal heirs searched out specified material in the offices of the Government and the jagir abolition authorities and on the strength of such material received, they had filed claims for recovering higher amounts 'in respect of the jagir abolished and commuted'. Even this contention is founded on the allegation that the heirs filed claims for recovering higher amounts in respect of the jagir abolished and commuted. So, the claim is in regard to the abolition of jagir and the commutation sum that should be fixed in respect thereof, the right to which passed to the heirs on the death of the deceased person. Probably, the heirs found out some errors in the figures adopted or the method of calculation followed, when the commutation sum was first fixed during the lifetime of the deceased person. It was only on the basis of such mistakes, they could have applied for enhancement after her lifetime. Indeed, they must have found some mistakes even when the first enhancement was made in 1959 and so applied again and got enhancement in 1961. It is patent that all these enhancements, though at the instance of the heirs, are referable only to the right of the deceased person, who received the commutation sum for the jagir which belonged to her and which right devolved on the heirs under the Abolition Regulation. There cannot, therefore, be any two opinions in coming to the conclusion that the right to get the commutation sum, even if it is enhanced more than once after the death of the deceased person, is property that passed on the death of late Rani Ranganayakamma. By no stretch of imagination the enhancement can be called an improvement made by the heirs or an enhancement in the value of the commutation sum on account of the changes in the market values. It, therefore, follows that estate duty is leviable on the basis of the commutation sum fixed in the year 1961.

13. Learned counsel for the accountable person, however, strongly relies on Section 36 of the Estate Duty Act. That section is for estimating the principal value of the property that has passed. It says that such value has to be estimated according to the price, which in the opinion of the Controller the property would fetch, if sold in the open market at the time of the deceased's death. This provision occurs in Part V, which deals with 'value chargeable', While Part II deals with 'imposition of estate duty' and 'extent of charge' and explains what the 'property' is that passes on the death of a deceased person. Part V prescribes the method of estimating the value of such property. So, manifestly, this provision has no bearing on the question as to what exactly passes on the death of the deceased person. All the same, learned counsel's submission is that if Rani Ranganayakamma had chosen to sell her right in the commutation sum in the open market at the time of her death, she would have got only that price which would correspond to the unpaid balance of the commutation sum that had been already fixed. Reliance is placed on passages in Chaturvedi's Estate Duty Law, 1973 edition, at pages 491 and 496, V. Balasubrahmanyam's Law and Practice of Estate Duty, second edition, pages 429 and 430, Dymond's Death Duties, fourteenth edition, at page 571, 15th Volume of Halsbury Laws of England, paragraph 145. The sum of all these passages is that where there is in fact no open market for property, a hypothetical open market must be assumed. Indeed, that is exactly what Section 36 provides. So, these passages do not render much, help. It is argued that the value of the interest or property that passed has to be fixed as the amount which remained unpaid to Rani Ranganayakamma. This argument, in our opinion, is untenable. Obviously, the intendment of Section 36 is to enable the Controller to estimate the value of the properties which clearly and definitely passed on the death of the deceased. In this case there is the fact that the commutation sum was later altered, but altered on the basis of the criteria that had already existed. No new criteria which came into existence after the death of Rani Ranganayakamma could have been adopted for calculating the commutation sum, because that is not permissible under the commutation regulation. Section 36 in our opinion is no guide to find out the right or interest which passed on the death of the deceased person; it is only for estimating the value of such right or interest after such right or interest is ascertained.

14. We will now consider some decisions which have a bearing on the point in issue. At the outset we would like to refer to two decisions of our own High Court, which are Mrs. Khorshed Shapoor Chenai v. Assistant Controller of Estate Duty : [1973]90ITR47(AP) and Freny Rashid Chenai v. Assistant Controller of Estate Duty : [1973]90ITR31(AP) .

15. As far as this aspect is concerned, the learned judges, Vaidya and Sriramulu JJ., who disposed of both the cases, relied on the later decision while deciding the first case. Both of them arose out of land acquisition proceedings and awards were passed by the Land Acquisition Officer fixing compensation. In the latter case the award was passed in March, 1965.

16. The respondent died before the awards were passed and the compensationwas received by the legal heirs. For the purpose of computing the estate duty in respect of the property that passed on the death of the deceased person, the compensation awarded by the Land Acquisition Officer was taken as the value of the lands which were acquired. In 1965 the son of the deceased person, who held a half share also died. The wife of the deceased person filed a return and the assessment was completed on 13th December; 1966. In that assessment the value of the land acquired was taken as the figure fixed as compensation by the Land Acquisition Officer. The accountable person did not divulge the fact that the claim for compensation had been referred to the civil court. Thereafter the civil court enhanced the compensation, whereupon the Assistant Controller of Estate Duty issued notice to the widow under Section 59(a) of the Estate Duty Act to show cause why the estate duty assessment should not be reopened and revised by including the enhanced compensation awarded by the civil court in respect of those lands. Thereupon, the widow filed a writ petition in this court under Article 226, challenging the action of the Assistant Controller. One of the questions that fell for decision was whether the compensation enhanced after the death of the deceased person could be taken into consideration for assessing the estate duty. After referring to some decisions, Sriramulu. J., rendering the decision of the court, observed at page 62:

'The right to receive compensation for the lands acquired by the Government at their market value on the date of acquisition is one and indivisible right. There is no right to 'receive compensation' and a separate right to receive 'extra compensation'. The only right is to receive compensation for the lands acquired by the Government, which is the fair market value on the date of acquisition. The argument of the learned counsel that the right to receive extra compensation accrued when the civil court passed the order and not before, does not merit acceptance. The so-called right to receive extra compensation cannot be torn from or considered separately from the right to receive the market value of the lands acquired by the Government. The right accrues to the owner of the lands as soon as the lands are acquired by the Government. It is, therefore, difficult to accept the argument of the learned counsel for the petitioner that a fresh and an independent right to 'receive extra compensation' accrued to the heirs of the deceased and that it was owned and possessed by the heirs of the deceased. The lands that were acquired were those of the deceased and not those of the heirs of the deceased. How could there have been an independent right to receive compensation or any part of the compensation by the heirs of the deceased, except as the heirs of the deceased? Since the deceased, by the time of receipt of the compensation, had died, the compensation was payable to the heirs of the deceased in their capacity as the heirs of the deceased; that is to say, the compensation that was payable to the deceased for the lands belonging to the deceased which were acquired by the Government was paid to the heirs of the deceased because of the death of the deceased.'

17. In the earlier case also, the civil court enhanced the compensation fixed by the land Acquisition Officer. On receiving that information, the Assistant Controller of Estate Duty issued notice to the accountable person requiring her to show cause why the mistake in the earlier assessment should not be rectified under Section 61 of the Estate Duty Act. Thereupon, the accountable person filed a writ petition challenging the validity of the notice. Vaidya and Sriramulu JJ., following their own decision above referred to, repelled the argument that the 'extra compensation' received after the death of the deceased person could not be taken into account while determining the Estate' Duty. Sriramulu J., speaking for the court, observed:

'By the nature of acquisition proceedings under the, Land Acquisition Act, the owner of the lands acquired by the Government gets a right to receive compensation for those lands at their market value on the date of acquisition. The right of the owner, whose lands have been acquired by the Government, springs directly from the acquisition of the lands by the Government. It is an indivisible right. There are no two rights, one to receive the compensation and the other to receive extra compensation. The legal heir, i.e., the accountable person in this case, has not received compensation in her own individual right but has received the compensation in respect of the lands belonging to the deceased and in her capacity as the legal heir of the deceased, whose lands have been acquired. We, therefore, hold, for the elaborate reasons given in our order in writ petition No. 54 of 1970, that the right to receive the compensation for the lands acquired by the Government was a valuable right which could be sold in open market. That is 'property' which passed on the death of the deceased.'

18. We may also note two other decisions of this court which arose under the Wealth-tax Act and deal with the compensation that was paid under the Estates Abolition Act. In V. Chandramani Pattamaha Devi v. Commissioner of Wealth-tax : [1967]64ITR147(AP) Jaganmohan Reddy J., as he then was, and Gopala Krishnan Nair J. held that a person liable to pay a sum of money which is ascertainable only in the future constitutes a 'debt' in law. Consequently, balance compensation payable under the Madras Estates Abolition Act, 1948, to a person whose estate has been abolished under the Act is an asset and is liable to be assessed to wealth-tax, even though the exact amount of compensation has to be ascertained and paid in the future. A payment to be made in the future on account of an existing obligation is as much a debt as a payment to be made in praesenti on account of a liability in praesenti.

19. Likewise, another Division Bench consisting of Jaganmohan Reddy C.J. and one of us, viz., Sambasiva Rao J. also held in Vadrevu Vengappa Rao v. Commissioner of Wealth-tax : [1968]69ITR552(AP) that a present liability to pay a sum of money, which is ascertainable only in the future, constitutes 'debt' in law. Hence, the compensation receivable, though unascertained on the valuation date, was liable to wealth-tax.

20. These decisions support the view we have taken.

21. Sri Subbarayudu, however, points out that the first two cases arose out of land acquisition proceedings where there was a continuity in the claim made for enhancement, while such continuity is absent in the case before us. In his submission that makes a world of difference. We are unable to agree with this contention. Even under the Land Acquisition Act, nobody is compelled to seek a reference to a civil court. Section 18 of the Land Acquisition Act is only an enabling provision. Likewise, in the commutation regulation also Section 5(2) provides for an appeal against the determination of a commutation sum. The enhancements of 1959 and 1961 could have been made only in accordance with law. So, as there is a right to seek enhanced compensation under the Land Acquisition Act, there is also a similar right under the commutation regulation to seek a higher commutation sum. The enhancement proceedings taken by the heirs can only be in continuation and pursuance of the right to get proper commutation sum. In those cases also, as in this case, the heirs sought reference to the civil court and secured larger compensation. So, the argument of the learned counsel that there is no continuity in making a claim for enhancement cannot be countenanced.

22. In regard to the two latter decisions, which related to the compensation under the Estates Abolition Act, the distinction pointed out is that under that Act half of the compensation was already determined and the other half would have to be determined in the future. But, in the case on hand, the entire compensation amount had already been determined during the lifetime of the deceased person. We fail to see how this circumstance makes any difference in principle. Whether the entire amount was fixed and later altered or only a part of it was fixed and the other part was fixed later, the question is whether the deceased person died entitled to the entire compensation amount, whether already fixed or to be fixed in future. There cannot be any doubt that the deceased person died entitled to receive the commutation sum whenever fixed.

23. Learned counsel in his turn relies upon the decisions of the Jammu and Kashmir High Court in Controller of Estate Duty v. Kasturi Lal Jain . In that case, compensation was paid to the heirs of a person dying in an air crash under the Carriage by Air Act, 1934. The court held that the compensation amount could not be included in the assets of the deceased person, holding that the deceased had neither any interest in the property nor was he in its possession either actually or constructively. Under the provisions of the Act, the compensation enures for the benefit of the members of the passenger's family and has nothing to do with the estate of the deceased. So, the compensation was held not liable to be assessed to estate duty. This is clearly a case of the compensation amount not at all belonging to the deceased person. In fact, as per the provisions of the Act, under which compensation was paid, the amount was for the benefit of the members of the victim's family. So, this decision has no bearing on the point.

24. Reference is also made to the Supreme Court decision in Ahmed G. H. Ariff v. Commissioner of Wealth-tax : [1970]76ITR471(SC) . It arose, under the wealth-tax Act and the Supreme Court, while construing the words 'if sold in the open market', observed that the words do not contemplate actual sale or the actual state of the market, but only enjoins that it should be assumed that there is an open market and the property can be sold in such a market and, on that basis, the value has to be found out. That is only with reference to the hypothetical open market postulated by Section 36 of the Estate Duty Act also. We must also refer to the view expressed in the same decision that 'property' is a term of the widest import and, subject to any limitation which the context may require, it signifies every possible interest which a person can clearly hold and enjoy. Going by this observation, it is seen that Rani Ranganayakamma had a right to get not only the compensation which had been fixed during her lifetime but also to any enhancement therein that might be made in future and so such enhancement also comes within the scope of the word ' property '.

25. In regard to actual valuation, learned counsel for the respondent brings to our notice a Revenue Board Circular bearing No. 2-D(W.T.)/64 dated May 15, 1964. That does not bear any reference to the levy of estate duty. Learned counsel only presumes that there should have been a similar circular in regard to the estate duty as well. No such circular is placed before us. Nor was it placed before the Income-tax Appellate Tribunal. So we cannot go by the circular referred to above.

26. Lastly, it is contended that the question referred to us is not a question of law and so the reference itself is not competent. A question which required so much consideration of the statutory provisions and thecase law on the point and which has been argued at length by both sides cannot be brushed away as a question which does not involve any legal points. The above consideration fully demonstrates that it is essentially a question of law.

27. For the foregoing reasons, we do not agree with the view of the Appellate Tribunal that only the balance amount of Rs. 2,73,649 should be included on account of jagir commutation belonging to late Rani Ranganayakamma and we hold that the higher commutation amount fixed subsequent to the death of the deceased should be taken as the basis for assessment of the estate duty. The reference is accordingly answered in favour of the department and against the accountable person. The department-applicant is entitled to get its costs from the respondent. Advocate's fee, Rs. 250.


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