1. This is an appeal by the department and the sole objection raised in its grounds, concerns the inclusion in the principal value of the estate of late A.V. Balaraman, represented by the accountable person, Smt. Shantha Balaraman, the sum of Rs. 10,000 received under the Deposit Linked Insurance Scheme in accordance with Rule 33A of the General Provident Fund (Central Services) Rules from the Food Corporation of India. The amount was included in the principal value by the Assistant Controller in the assessment, but in the appeal preferred by the accountable person, the Appellate Controller directed exclusion of the amount on the ground that the amount paid to the deceased's widow was not property which was in existence during his life-time and it was nothing more than a gratuitous payment by the employer to the heirs because if the deceased had survived until superannuation, he would have got nothing under this provision. He referred to, and relied in this context on the Commentaries on Estate Duty by Nanavati and of Dymond on English Duties. Aggrieved by his order, the department is in appeal. It is claimed in the grounds that the Appellate Controller should have held that the amount was includible in the principal value, in view of Section 15 of the Estate Duty Act, 1953 ('the Act').
2. The learned departmental representative in support of the appeal contended that the inclusion of the amount in the principal value of the estate is justified because the deceased was competent to dispose of the amount, on a reading of Rule 33A of the General Provident Fund Rules. According to this rule, which, it is common ground is applicable in the present case, on the death of a subscriber to the general provident fund, the person entitled to receive the amount standing to the credit of the subscriber shall be paid by the Accounts Officer an additional amount equal to the average balance in the account during the three years immediately preceding the death of such subscriber, subject to certain conditions, one of which is that the additional amount so payable shall not exceed Rs. 10,000. It is a common ground that it is in pursuance of this rule that the sum of Rs. 10,000 has been received by the wife of the deceased. The submission of the learned departmental representative in this connection is that since the payment of the additional amount goes with, and is inextricably tied up with, the payment of the amount standing to the credit of the subscriber in the general provident fund account and it is provided that it shall be payable to the person entitled to receive the amounts standing to the credit of the subscriber, it brings in the question of the subscriber's power to designate the persons entitled to receive the provident fund balance standing to his credit in the general provident fund account and as a necessary concomitant, the additional amount payable under this rule. In other words, the implication of his argument is that in the power of the subscriber to designate the person entitled to receive the amounts standing to his credit in the general provident fund account is implicit also the power to name the persons entitled to receive the additional amount. Thus, according to the learned departmental representative, the deceased subscriber had the power of disposition of the additional amount, notwithstanding the fact that it was payable not during his lifetime, but on his death. In the circumstances, it is submitted that Section 6 of the Act is also attracted, according to which, property which the deceased was at the time of his death competent to dispose of shall be deemed to pass on his death. He also relied, in support of the appeal, on the decision of the Madras High Court in M.Ct. Muthiah v. CED  94 ITR 323 which was concerned with the money received by heirs of deceased under personal accident insurance policy and where the question arose as to whether it would form part of the estate of the deceased and would pass on his death. It was found in that case that the amount payable on the death of the insured was fixed in the policy itself. It was in the contemplation of the parties even at the time of the contract that in the case of death the amount would be payable either to the nominee or the legal representatives and not to the insured and thus it was in the nature of a provision made by the deceased for such persons. It was held that though the deceased had no interest in the money as such, because that came into existence, the moment after his death and was payable to the nominee or legal representatives, yet he had a right in the payment, on his death to his legal representatives, i.e., he had an interest over the payment of money and not in the money itself. Thus, he had a right to take away the right of the legal representatives to receive the money and vest it in some other person by will or by nominating the person to whom the amount should be paid. The nomination in such a case was held to be in the nature of a disposition by will.
It was further held that though the property was not in existence before the death, since it came at the time of his death, the deceased was competent to dispose of the same by will and it is this power which attracts the provision and makes it property which is deemed to pass on the death of the deceased under Section 6 of the Act.
3. The learned counsel for the accountable person contended that for any property to pass, or to be deemed to pass, the deceased should have an interest in it, which the deceased could not be said to have had in the present case. Reference was made and reliance placed on the decision of the Supreme Court in the case of CED v. Hussainbhai Mohamedbhai Badri  90 ITR 148, of the Bombay High Court in the case of CED v. Govindji Jethabhai K/V/Y  115 ITR 664, the Madras High Court decision in CED v. Estate of Late R. Ramanujam[ 1977] 108 ITR 273 and the Andhra Pradesh High Court decision in Smt. Lakshmisagar Reddy v. CED  123 ITR 601. Referring to rules 33 and 33A, it was pointed out that the deceased could not be said to be entitled to, or to have any right in, the additional amount payable and he could not have received the amount during his lifetime and that the property came into existence only after his death. Rule 33 is concerned with the payment of money to a subscriber of general provident fund standing to his credit, while Rule 33A deals with the additional amount payable.
The learned departmental representative pointed out that in the decision of the Andhra Pradesh High Court in Smt. Lakshmisagar Reddy's case (supra) relied on by the accountable person, the decision of the Madras High Court in M.CT. Muthiah's case (supra), has been distinguished and not disapproved.
4. In the decision of the Madras High Court in M Ct. Muthiali's case (supra) relied on by the learned departmental representative the facts are distinguishable from the facts that are obtained in the case before us. In that case it is noticed that the deceased had taken a personal accident policy on his life and under the policy an amount was receivable by the legal representatives which was included in the estate of the deceased. It was held that the money paid under the policy must be deemed to pass on the death of the deceased because of his competence to dispose of the same by will, as the holder of the policy has a right to have the amount paid to his legal representative or nominee. In other words, the deceased was held to be competent to specify the persons to whom the policy money is required to be paid. In the present case before us the same cannot be said of the additional amount, which is payable in accordance with Rule 33A of the General Provident Fund Rules. It is true that the deceased had the power to nominate the persons to whom the amounts standing to his credit would become payable. This is contained in Rule 5 which says that a subscriber shall at the time of joining the funds send to the persons stated therein, a nomination conferring on one or more persons the right to receive the amount that may stand to his credit in the funds in the event of his death, before that amount has become payable, or having become payable, has not been paid. This power only extends to the payment of the amount standing to the credit of the subscriber in provident fund. It does not extend to the additional amount payable under Rule 33A because the payment of such an additional amount is governed by the rule and not by any power vested in the subscriber. The fact that under the operation of the rule the amount becomes payable to the persons to whom the amount standing to the credit of the subscriber is payable, does not mean that the additional amount is payable because of the exercise of the power of nomination of the subscriber, but because of the operation of the rule. It is not, therefore, possible for us to accept the department's contention that the deceased had power of disposition in regard to the additional amount payable under Rule 33A. The test is to see whether he would have nominated to receive the additional amount any person different from the person entitled to receive the balance to the credit of his account.
5. Coming to the decision relied on by the accountable person, in the case of Hussainbhai Mohamedbhai Badri (supra), the Supreme Court was concerned with the provisions of Section 5 of the Act which is concerned with charge of estate duty on the principal value of all properties which pass on the death of a person. Section 5 refers to properties in which the deceased had an interest before his death and which interest passed on his death to his legal heirs or other persons.
This case is not of much relevance for considering the question before us, as the department's stand in the present appeal is that the property shall be deemed to pass under Section 6 or Section 15. The case of Estate of Late R. Ramanujam (supra) also can be distinguished on facts because in that case it was found that the department's claim was based purely with reference to Section 15 and the observation at page 275 of the report shows that according to the counsel for revenue's own stand, argument of the revenue with reference to other provisions like Section 5 would not be available. However, this decision supparts the accountable person's case in the present appeal with reference to Section 15, because it cannot be held in the present case, as in that case, that the amount received was an annuity or interest provided by the deceased either by himself alone, or in concert, or by arrangement with any other person. The decision in the case of Govindji Jethabhai Virji (supra) was cited in support of the principle that in order to constitute passing of property it is necessary that the deceased should have an interest in the property at the time of the death, but the principle in the decision stated is quite the opposite and we do not see how the decision supports the accountable person's case. The decision of the Andhra Pradesh High Court in Smt. Lakshmisagar Reddy's case (supra), in our view clearly supports the contention of the accountable person in this case. In that case the wife of the deceased employee of Indian Airlines Corporation, who died in an air accident, received a sum of Rs. 91,586 including Rs. 74,960 as compensation under Rule 73 of the Indian Airlines Corporation Employees' Service Rules and Establishment Orders. Exemption was claimed in respect of the sum of Rs. 74,960 on the ground that the same was not property that passed on death, since the deceased had no vested or contingent interest in it. The High Court held on a consideration of the facts and the relevant decisions noted therein, that the amount was not property which passed on death liable to estate duty under the Act.
The question posed and considered for decision appears at page 604. It is stated that the crux of the problem is whether the compensation of Rs. 74,960 is or is not property that passed on to the accountable person on the death of the deceased within the meaning of Section 5(1) of the Act or it is property which is deemed to pass on death under Section 6. In that case, it is to be noticed that the deceased had a right to nominate a person or persons, who would be entitled to receive compensation payable by the Corporation under Rule 73. The Court, however, held that the right of nominee, as stated above, cannot be equated to a right, if any, of the deceased to dispose of the compensation amount at the time of his death, that the competency to dispose of the property within the meaning of Section 6 would mean the right of the deceased at the time of his death to do so with regard to such property and the deceased employee of the corporation was not competent to dispose of the compensation amount due and payable to his legal representative, except to nominate his own nominee or nominees to receive the amount due and payable under Rule 73 after his death. In the present case, as we have already stated, the deceased had no power to nominate any person to receive the additional amount under Rule 33A and the mere fact that such additional amount is payable to a person entitled to receive the amounts standing to the subscribers, credit in the general provident fund account on account of any nomination, does not imply that the deceased had a power of nomination even over the additional amount. The correct test as already stated is to see whether he could have nominated any person to receive the amount due under Rule 33A other than the person who may be entitled to receive the amount to the credit of his account. This, obviously he cannot do under the rule because the rule states that it is payable to a person entitled to receive the amounts standing to the deceased's credit. But even if it is assumed that he has such power, the decision of the Andhra Pradesh High Court in the case of Smt. Lakshmisagar Reddy (supra) shows that such a power cannot be equated to a right of the deceased to dispose of the amount at the time of his death. It is well settled that in interpreting the principles of a taxing statute if more than one view is possible in regard to the liability under the provisions of the statute, then the view which is favourable to the taxpayer and leaves him with a lesser burden should be adopted. In the present case, the Andhra Pradesh High Court decision in Smt. Lakshmisagar Reddy's case (supra), directly supports the accountable person's claim in regard to the dispute. We would, therefore, uphold the claim of the accountable person, respectfully following the decision of the Andhra Pradesh High Court and reject the objection, of the department. The order of the Appellate Controller is, therefore, upheld and the appeal is dismissed.