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S.P. Valliammai Achi Vs. Controller of Estate Duty - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberTax Case No. 275 of 1965 (Referred Case No. 128 of 1965)
Judge
Reported in[1969]73ITR806(Mad)
ActsEstate Duty Act, 1953 - Sections 2(15), 9 and 27; Transfer of Property Act
AppellantS.P. Valliammai Achi
RespondentController of Estate Duty
Appellant AdvocateK. Srinivasan, ;D.S. Meenakshisundaram and ;K.C. Rajappa, Advs.
Respondent AdvocateV. Balasubrahmanyan and ;J. Jayaraman, Advs.
Cases ReferredCherukuri Eswaramma v. Controller of Estate Duty
Excerpt:
- - but, with due respect, prima facie we are not, without a further consideration, satisfied that the word 'otherwise' should be limited in its scope in that way. it is true the section does not in so many words say that if the other conditions are satisfied, the gift will be dutiable if it was within two years of the deceased's death......in her capacity as his sole executrix, declared that property worth rs. 25,000 passed on his death. the deceased and his son had constituted a hindu undivided family. by a deed dated september 7, 1953, the deceased, in consideration of a sum of rs. 5,000 received from his son, purported to relinquish his share valued at that amount in the joint family assets. the revenue applied explanation 2 to section 2(15) and added rs. 1,71,986 being the net value of the deceased's half share as having passed on his death. the revenue at all stages declined to accept that section 9 had no application on the ground that the document aforesaid did not operate as a transfer. the reference to this court is of the question : 'whether, on the facts and in the circumstances of the case, the amount of.....
Judgment:

Veeraswami, J.

1. This is a reference under the Estate Duty Act, 1953. One S.P. Annamalai Chettiar died on August 6, 1954. The accountable person, his daughter-in-law, in her capacity as his sole executrix, declared that property worth Rs. 25,000 passed on his death. The deceased and his son had constituted a Hindu undivided family. By a deed dated September 7, 1953, the deceased, in consideration of a sum of Rs. 5,000 received from his son, purported to relinquish his share valued at that amount in the joint family assets. The revenue applied Explanation 2 to Section 2(15) and added Rs. 1,71,986 being the net value of the deceased's half share as having passed on his death. The revenue at all stages declined to accept that Section 9 had no application on the ground that the document aforesaid did not operate as a transfer. The reference to this court is of the question :

'Whether, on the facts and in the circumstances of the case, the amount of Rs. 1,71,986 representing the value of the share of the deceased in the joint family property relinquished by him has been correctly included in the estate of the deceased as property deemed to pass on his death '

2. The recitals in the document in brief are these : Though both the father and son were members of a Hindu undivided family, the son was actually in seizin of the entire family properties and was managing them according to his own will and pleasure. Since the father resented the son doing so, he wanted to give effect to his displeasure by bringing about a disruption of the joint status, and relinquishing his share in the family properties in consideration of a receipt of Rs. 5,000 from the assets of his son, for the purpose of maintaining himself and his wife. The document valued the half share at Rs. 5,000. Argument is addressed to us by learned counsel for the accountable person that the document should be construed as a deed of partition and that even if it be looked upon as a relinquish-ment, in either case, there was no transfer. It seems to us that it would bepointless to enquire whether the document in effect amounts to a partition or a relinquishment, for in either case there would be no transfer in the normal sense--vide Commissioner of Gift-tax v. Getti Chettiar, [1960] 60 I.T.R. 454 and S.P. Chinnathambiar v. V. R. P. Chinnathambiar, : AIR1954Mad5 .

3. Nor do we think that for purposes of deciding the reference, it is necessary to elucidate the scope of the word 'otherwise' occurring in Section 9. Cherukuri Eswaramma v. Controller of Estate Duty, : [1968]69ITR109(AP) was brought to our notice to point out that the word should be read ejusdem generis. So done, it has been suggested, unless thefe is some kind of a transfer, a term not defined in the Act, there would be no room for application of Section 9. Cherukuri Eswaramma v. Controller of Estate Duty no doubt took that view. But, with due respect, prima facie we are not, without a further consideration, satisfied that the word 'otherwise' should be limited in its scope in that way.

4. The facts of this ease, in our opinion, seem to square with the second Explanation to Section 2(15). That, no doubt, is an Explanation to the inclusive definition of property. But the language of it seems to go further and coins a deemed disposition in the nature of a transfer. The mechanics of the transfer for purposes of Explanation 2 consist in the extinguishment at the expense of the deceased of a right and the accrual of a benefit in the form of the right so given up in favour of the person benefited. Transfer in a normal sense and as understood with reference to the Transfer of Property Act connotes a movement of property or interest or right therein or thereto from one person to another in praesenti. But in the kind of disposition contemplated by the second Explanation, one can hardly trace such a transfer because by the mere fact of extinction of a certain right of the deceased which does not involve a movement, a benefit is created in favour of the person benefited thereby. In the present case the son who was a quondam coparcener had a pre-existing right to every part of the coparcenary property, and if by a partition or a relinquishment on the part of one or more of the coparceners, the joint ownership is severed in favour of severally, the process, having regard to the peculiar conception of a coparcenary, involves no transfer. That is the view this court expressed in Commissioner of Gift-tax v. Getti Chettiar to which one of us was a party. But Explanation 2 is concerned not with that kind of situation, but an extinguishment of a right and creation of a benefit thereby, and this process is statutorily deemed to be a disposition which is in the nature of a transfer. Section 9 itself speaks of a disposition, and such a disposition no doubt should at least operate or purport to operate as an immediate gift inter vivos whether by way of transfer, delivery, declaration of trust, settlement upon the person in succession, or otherwise. But the word 'transfer' in Section 9 cannot be understood in isolation and by confining one's attention only to that section. Its scope has got to be appreciated and delimited with reference to the other provisions of the Act, one of which is the second Explanation to Section 2(15). When the Explanation speaks of a disposition of the kind it contemplates, it seems to us to be impossible to conceive that that kind of disposition would have been intended by the legislature to be excluded from the scope of Section 9. We are of the view, therefore, that Section 9 read with Section 2(15), Explanation 2, has been rightly invoked by the revenue for the inclusion of the value of the half share of the father, less the sum of Rs. 5,000 in view of the proviso to Section 27.

5. A further argument for the accountable person is that, since the gift was made within two years of the death, Section 9 will have no application. In our view, the contention has no force. It is true the section does not in so many words say that if the other conditions are satisfied, the gift will be dutiable if it was within two years of the deceased's death. But the meaning of the section is plain. By stating that a gift made not bona fide two years or more before the death of the deceased would be chargeable, it necessarily follows that a gift whether bona fide or not made within two years of the death of the deceased would be hit by Section 9.

6. We answer the question against the accountable person with costs. Counsel's fee, Rs. 250.


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