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Controller of Estate Duty Vs. Estate of Late Sanka Simhachalam (by Accountable Person) - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAndhra Pradesh High Court
Decided On
Case NumberCase Referred No. ESD 2 of 1972
Judge
Reported in[1975]99ITR370(AP)
ActsEstate Duty Act, 1953 - Sections 2(15) and 33(1)
AppellantController of Estate Duty
RespondentEstate of Late Sanka Simhachalam (by Accountable Person)
Appellant AdvocateP. Rama Rao, Adv.
Respondent AdvocateM.J. Swamy and ;J.V. Srinivasa Rao, Advs.
Excerpt:
.....is one of the conditions to be satisfied for exemption under section 33(1)(n). construing the words 'belonging to him',the tribunal was of the opinion that though the deceased was a life-tenant, the house must be said to 'belong' to him on the date of his death, since till that date, he had absolute right of user. since the two conditions laid down by section 33(1)(n) are satisfied, the tribunal held, that the accountable person is entitled to the exemption. --(1) to the extent specified against each of the clauses in this sub-section, no estate duty shall be payable in respect of property of any of the following kinds belonging to the deceased which passes on his death--(n) one house or part thereof exclusively used by the deceased for his residence, to the extent the principal..........him. estate duty is now sought to be levied on these properties, interests, etc. in respect of the house property in parvathipuram, the accountable person claimed exemption under section 33(1)(n) of the act. the assistant controller of estate duty and the appellate controller took the view that no such exemption could be given as that provision does not apply to the house in question. they held that the deceased did not die as full owner of the house and so it did not 'belong' to him when he died, so that it could be brought within the ambit of the exemptions provided under section 33(1). it may be noted here that more than two years before his death, the deceased executed a settlement deed under which he retained a life interest in the house and conveyed the vested remainder to his son,.....
Judgment:

Sambasiva Rao, J.

1. The reference arises under the Estate Duty Act. Sanka Simhachalam died on December 21, 1966, leaving certain properties, interests and rights behind him. Estate duty is now sought to be levied on these properties, interests, etc. In respect of the house property in Parvathipuram, the accountable person claimed exemption under Section 33(1)(n) of the Act. The Assistant Controller of Estate Duty and the Appellate Controller took the view that no such exemption could be given as that provision does not apply to the house in question. They held that the deceased did not die as full owner of the house and so it did not 'belong' to him when he died, so that it could be brought within the ambit of the exemptions provided under Section 33(1). It may be noted here that more than two years before his death, the deceased executed a settlement deed under which he retained a life interest in the house and conveyed the vested remainder to his son, who is now the accountable person. Since he had only a life-interest in the house, the Assistant Controller as well as the Appellate Controller took the view that the housedid not 'belong' to him and consequently Section 33(1) does not apply tothe house.

2. On the other hand, the Income-tax Appellate Tribunal, Hyderabad Bench, to whom the accountable person preferred an appeal, held that by the fiction introduced under Section 3(3), property in respect of which the deceased had a life interest must be deemed to pass on the death, which is one of the conditions to be satisfied for exemption under Section 33(1)(n). Construing the words 'belonging to him', the Tribunal was of the opinion that though the deceased was a life-tenant, the house must be said to 'belong' to him on the date of his death, since till that date, he had absolute right of user. Since the two conditions laid down by Section 33(1)(n) are satisfied, the Tribunal held, that the accountable person is entitled to the exemption.

3. At the instance of the revenue, the following question was referred for our decision :

'Whether, on the facts and in the circumstances of the case, the house property in which the deceased resided at the time of his death and of which he was only a life-tenant, is entitled to the exemption under Section 33(1)(n) of the Estate Duty Act, 1953 ?'

4. The answer to this question depends on the construction of the language of Section 33(1)(n). Obviously, no other question was argued before the Tribunal including the question, as to which interest ceased on the death of the deceased, and shall be deemed to pass on his death under Section 7. That is why the Tribunal did not consider this aspect of the matter, nor is it included in the reference. We are not, therefore, going into that matter in this case.

5. Now coming to the exemption under Section 33(1)(n), claimed by the accountable person, it reads as follows :

'33. Exemptions.--(1) To the extent specified against each of the clauses in this sub-section, no estate duty shall be payable in respect of property of any of the following kinds belonging to the deceased which passes on his death--... (n) one house or part thereof exclusively used by the deceased for his residence, to the extent the principal value thereof does not exceed rupees one lakh if such house is situate in a place with a population exceeding ten thousand, and the full principal value thereof, in any other case :'

6. It is not disputed before us that the circumstances as to the exclusive use of the house as the residence of the deceased, the value of the house, its situation in a place with a population exceeding 10,000, are all in accordance with the requirements of Clause (n). The only question is whether the provisions of the main Sub-section (1) itself are satisfied. According to it, no estate duty becomes payable 'in respect of property' of thefollowing kinds 'belonging to the deceased' which passes on his death. As the Tribunal has held, the right must be deemed to have passed on the death of the deceased within the meaning of Section 3(3). It is in regard to the words 'belonging to the deceased' that the Assistant Controller and the Appellate Controller on the one side and the Appellate Tribunal on the other, disagreed. While the Controllers took the view that the words 'belonging to' mean and indicate only full ownership, the Tribunal opined that even interest like tenancy can be said to belong to the deceased person and it is not necessary that the property should absolutely be that of the deceased person in order to say that it belonged to him.

7. The words 'belonging to' no doubt are capable of denoting an absolute title, but it cannot be said that the connotation of the words is exhausted with absolute title. Even possession of an interest, which is less than that of full ownership can be indicated by these words. For instance, if a property belongs absolutely to a person, we say that the property belongs to him. Likewise, if any interest in a particular property is in a person, we also say that that right belongs to him. So it is not possible to limit the scope of the meaning of the words 'belonging to' only to full ownership. Even having interest in property can come within the meaning of the words. When one is required to construe the meaning of the words in any particular statute or a document, the precise meaning and the sense has to be gathered by a reading of the provision, and the enactment as a whole or the document in its entirety and adverting to the context in which they occur. We draw support for this view from the decision of the Supreme Court in Raja Mohammad Amir Ahmad Khan v. Municipal Board of Sitapur, AIR 1956 SC 1923, 1929. Ayyangar J., speaking for the court, says thus on this matter in paragraph 14 :

'Though the word 'belonging' no doubt is capable of denoting an absolute title, it is nevertheless not confined to connoting that sense. Even possession of an interest less than that of full ownership could be signified by that word. In Webster ' belong to' is explained as meaning, inter alia, ' to be owned by, be in the possession of '. The precise sense Which the word was meant to convey can, therefore, be gathered only by reading the document as a whole and adverting to the context in which it occurs.'

8. In the light of this wide connotation given to the words, the Supreme Court held in that case that when a tenant stated that a land belonged to him, he was asserting merely the substantial character of his interest in the property and it did not, in the circumstances, amount to disclaimer or renunciation of tenancy.

9. Now, the words 'belonging to' occurring in Section 33(1) will have to be understood in the light of the language used in the provision and in the statute and in the context in which they are used. Under Sub-section (1) to Section 33, exemption from estate duty is given 'in respect of property' 'belonging to the deceased' which passed on his death. In the Estate Duty Act, the word 'property' is not used merely in its popular sense. The expression is defined in Section 2(15) as including 'any interest in property, movable or immovable, the proceeds of sale thereof and any money or investment for the time being representing the proceeds of sale and also includes any property converted from one species into another by any method'. It is quite manifest from the definition that the word 'property' includes any interest in property, whether it be movable or immovable. The meaning of the word is not confined to an absolute title in the corpus of any property. When interest in property is also 'property' within the meaning of the Act, and the same word is used in Section 33, it will have to be understood accordingly. If it is so understood, Section 33(1) would read like this : 'No estate duty shall be payable in respect of property, which includes any interest in property, belonging to the deceased which passed on his death'. On all counts, the deceased person had a life-interest in the house. That certainly is an interest within the meaning of the word ' property ' as contained in Section 2(15) and adopted in the Act. Thus, when Section 33(1) is read in the light of the definition contained in Section 2(15), the question referred for our answer becomes easy and in fact poses no difficulty. No duty would be payable at all in respect of any interest in the property which belonged to the deceased and which passed on his death if it comes within the scope of any of the clauses in Section 33(1). Accordingly, we answer the reference by saying that, in the circumstances of the case, the house property in which the deceased was residing at the time of his death and of which he was only a life-tenant is entitled for exemption under Section 33(1)(n) of the Estate Duty Act, 1953. The answer is thus in favour of the accountable person and against the revenue. The accountable person will be entitled to the costs of this reference. Advocate's fee Rs. 250.


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