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R. Kanakasabai and ors. Vs. the Controller of Estate Duty, Madras - Court Judgment

LegalCrystal Citation
SubjectMunicipal Tax
CourtChennai High Court
Decided On
Case NumberTax Case No. 2 of 1966 and Reference No. 1 of 1966
Judge
Reported inAIR1970Mad197; [1969]74ITR429(Mad)
ActsEstate Duty Act, 1953 - Sections 10 and 12
AppellantR. Kanakasabai and ors.
RespondentThe Controller of Estate Duty, Madras
Appellant AdvocateK. Srinivasan, ;D.S. Meenakshisundaram and ;K.C. Rajagopala, Advs.
Respondent AdvocateV. Balasubramanian and ;J. Jayaraman, Advs.
Excerpt:
- - that is clearly not the case here in any of the deeds......2. we are of the view that there is no room whatever for the application of section 12. the gift deeds were all executed more than two years prior to the death of the deceased, the first four deeds are in favour of his sons and grandsons and are in stereotyped form. the disposition in these documents of the immovable property is of absolute ownership. on that matter there can be little doubt. but the disposition was followed by these words, 'during my lifetime you should pay me rupees one thousand per annum for the expenses of my livelihood'. the payment should be made out of the income from the properties given to the grandsons. in the case of the gift to the daughter, die words were, 'you should maintain myself and my wife rajambal alias sivanandavalli animal till our lifetime'......
Judgment:

Veeraswami, J.

1. This is a reference under the Estate Ditty Act at the instance of the accountable persons. One Rathna-sabhapathi Pillai died on February, 5, 1959. The subject-matter of the reference is the total value of six gifts of immovable property made by tile deceased person in favour of his sons, grandsons, daughter and wife namely, Rs. 7,33,656. The Revenue considered that the reservation in each of the gifts towards maintenance attracted Section 12, or, in the alternative, Section 10: The question to consider is:

'Whether, on the facts and in the circumstances of the case, the properties settled by the deceased by the six deeds of settlement valued at Rs. 7,38,656 or any part thereof was not liable for inclusion in the estate of the deceased as property deemed to pass on his death?'

2. We are of the view that there is no room whatever for the application of Section 12. The gift deeds were all executed more than two years prior to the death of the deceased, The first four deeds are in favour of his sons and grandsons and are in stereotyped form. The disposition in these documents of the immovable property is of absolute ownership. On that matter there can be little doubt. But the disposition was followed by these words, 'During my lifetime you should pay me rupees one thousand per annum for the expenses of my livelihood'. The payment should be made out of the income from the properties given to the grandsons. In the case of the gift to the daughter, die words were, 'You should maintain myself and my wife Rajambal alias Sivanandavalli Animal till our lifetime'. In the case of the wife, the language is, 'Since I am getting sickly and I reel I may not live long from now and on the confidence that you will maintain me till my life, I hereby give by means of this' settlement with immediate effect,...' The provision in the first four deeds for payment of a sum of Rupees 1,000 per annum, in our opinion, is not a charge on the property given as a gift, nor does it create any interest therein. The position is the same in respect of the deed in favour of the daughter. So far as the wife is concerned, there is not even a provision for maintenance. All that is found is a confidence expressed by the donor as to his maintenance by the wife. For Section 12 to apply, there should be a reservation of an interest in the property settled. The reservation may be express or implied, but it should be of an interest in the property which is the subject-matter of the settlement. That is clearly not the case here in any of the deeds. We are unable to accept the contention for the Revenue to the contrary.

3. The question then is whether Section 10 is attracted. In our opinion, the non-exclusion clause as to possession and enjoyment does not apply. The deeds are clear on that, for, they say that possession has been delivered. It has to be assumed, therefore, that the donee in each case assumed possession and enjoyment and to the entire exclusion of the donor. The question then is whether there was a exclusion of the donor from any benefit to him by contract or otherwise. That the providon for payment of maintenance in the deeds in favour of the sons, grandsons and daughter amounted to a contract can admit of no doubt. The obligation to pay maintenance is supported by the consideration of making a gift in each of these cases. The only other question, therefore, is, is it a benefit reserved to the donor by the contract within the meaning of Section 10, We should think that it is such a benefit. The contention for the accountable persons is that the benefit should be in the nature of an interest in the property given as gift. We are unable to construe the last words in the section in that manner. In our opinion there is no warrant for it The non-exclusion is in two parts, one in respect of possession and enjoyment of the property which is the subject-matter of the gift and the other from any benefit to the donor which need not necessarily be from the property. If it is intended that the benefit should be founded on or be derived only from the property which is gifted, the section would have been worded differently. It does not say that it should be a benefit to the done from the property by contract or otherwise. We are inclined, to think that any benefit which the donor bargains for by a contract embodied in a document which conveys the property by way of gift would be within the purview of the section. We are of the view that the provision for maintenance in the four deeds in favour of the sons and grandsons and also the provision in the deed in favour of the daughter do amount to such a benefit which will attract duty as property passing to that extent on the death of the deceased. It follows that it is not the entire subject-matter of the gift that will be dutiable but only to the extent of the benefit.

4. How the benefit would be valued is a different matter. But it is obvious that the valuation of the benefit would in every case arise only on the death of the donor. That the value of the benefit, that is to say, the amounts of maintenance fixed in each of the first four deeds multiplied by the years of the donor's existence would give the provision (sic) in the deed in favour of the daughter is concerned, no sum has been fixed as maintenance. It is for the Revenue in consultation with that accountable person to fix the quantum in that case which would be taken as having passed on the death of the deceased. We may add that so far as the deed in favour of the wife is concerned, in our opinion, it makes no provision at all for maintenance in the form of any kind of reservation.

5. Learned Counsel for the Revenue argues that lie entire value of the property should be taken as having passed. But it is hardly necessary to say that Section 10 does not admit of it That section is clear that only to the extent of the non-exclusion of benefit there would be passing.

6. We answer the question in favour of the accountable persons but in the manner indicated above, with costs. Counsel's fee Rs. 250.


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