Per Shri S. Rajaratnam, Accountant Member - This is a departmental appeal arising out of the order of the Appellate Controller in respect of the estate duty assessment on Smt. B. R. Santamani, accountable person for the estate of the deceased Shri P. R. Kesavamurthy who died on 23-5-1979.
2. The decease was an employee of the RBI and was a member of Reserve Bank Employees Co-operative Bank Ltd. (the bank). The dispute relates to the amount of Rs. 10,000 received by the accountable person in her capacity as wife and nominee of the deceased from the relief fund constituted by the said Co-operative Bank. It is seen from the copies filed of the relevant bye-laws that this amount was paid by the bank of collecting Rs. 10 from each member on the death of one of them. The copy of the relevant resolution reads as under :
'Resolved to pay to the nominee of the deceased member a sum of Rs. 10,000 from death relief fund in the event of death of a member and recover from the salary of the members sum of Rs. 10 and credit the same to the death relief fund account. Amount falling short after collections be met with from death relief fund.'
The Assistant Controller was of the view that this is also property passing under section 6 of the Estate Duty Act, 1953 (the Act) inasmuch as the deceased had the right to nominate the beneficiary. The first appellate authority found that the property was not in existence at the time of the death of the deceased. He also felt that he was not, therefore, competent to dispose of the same. He, therefore, held that the property did not pass on his death. He also found that the decision of the Andhra Pradesh High Court in the case of Smt. Lakshmisagar Reddy v. CED : 123ITR601(AP) supports the accountable persons case. Hence, he deleted the addition. The departmental appeal seeks to distinguish the decision of the Andhra Pradesh High Court on the ground that the payment in this case was allegedly neither gratuitous nor dependent upon the discretion of the employers. There are no pre-conditions to be satisfied by the accountable person. It is claimed that in the assessees case the payment was a compulsory one. It is also stated that there is a direct nexus between the right of the deceased as a member of the bank and the right of the accountable person to receive the payment. It is for this and other reasons that it is claimed that the order of the Assistant Controller should have been upheld.
3. The learned departmental representative relied upon the grounds in the departmental appeal. He sought to distinguish the facts of the case before the andhra Pradesh High Court. The learned representative for the accountable person, on the other hand, claimed that it is not property which passes on death under section 6 as the property was not in existence even as found by the first appellate authority on the date of death. He also urged that it does not fall under any of the deeming clauses. He claimed that is was not open to the deceased to indicated any persons other than members of the family. Again, no separate nomination was necessary for the purpose of death relief. The same nomination as for provident fund was given effect to. This shows that he did not exercise any independent discretion in this regard. He also claimed that the accountable person, nominee or any other person had no legal right to enforce the payment as this was not a matter of trust vis-a-vis the beneficiary in absence of privity of contract. He alternatively claimed that even if it were to be deemed to pass on death, the accountable person should be given the benefit of section 34(3) of the Act whereby this would have to be treated as a separate estate.
4. We have carefully considered the records as well as the arguments. It is clear from the resolution passed on 23-9-1978 that the amount for the payment to nominee of the deceased was found by deduction of Rs. 10 from the salary of each member in the event of death of a member. In other words, the fund comes into existence only after the death. Hence, the first appellate authority was right in assuming that the property was not in existence. No doubt, the learned departmental representative pointed out to by-law 4-d which had initially provided for collection of Rs. 2 per member towards death relief fund of Rs. 1,000. But that had since been modified. Hence, the payment with which we are now concerned was out of collections of Rs. 10 per member subsequent to the death of the deceased. As regards the amount so collected and paid, there could be no passing of the property within the meaning of section 6. No other deeming provision as between section 6 to section 17 of the Act has also been brought to our notice. To the extent that the shortfall, if any, was made good by the money that is already available with the death relief fund, it stands to reason that the money was in existence. We do not know the precise amount of such shortfall in the amount of Rs. 10,000 with which we are concerned. Assuming that there was such a shortfall met from the death relief fund which was build up by the contribution of members, it could be said that the moneys were in existence. Section 15 may well cover such shortfall as it possibly could be argued that is ia payment from an interest provided by the deceased by becoming a member of the bank with such a scheme and making a contribution towards such death relief fund by way of subscription to the same. Such an inference is, no doubt, stoutly resisted by the learned representative of the accountable person. We do not, however, purpose to enter into a detailed discussion in respect of the same because the alternative argument of the accountable person based upon section 34(3) would look after accountable persons interest in this regard. Section 34(3) would require hat the estate in which the deceased never had an interest has to be separately assessed and that it could not be aggregated with other assets. The entire amount of Rs. 10,000 whether it came out of the contributions collected after his death or out of subscriptions during his lifetime, is an amount in which the deceased never had any interest. Hence, the same could not be aggregated with the other assets of the deceased as had been done by the Assistant Controller. We have, therefore, to uphold the order of the first appellate authority even on the ground that his amount of Rs. 10,000 could not be aggregated with the other assets even if this amount is treated as one passing under section 6 or deemed to pass under section 15 or under any other sub-section. It is not to say that we have accepted the revenues contention that it either passed or deemed to pass or that we have rejected the accountable persons contention that the deceased had no right of disposition or power of appointment in a much as he had no separate right of nomination and even the right of nomination for provident fund etc., was a very restricted right under the Reserve Bank Rules. We do not, however, find it necessary to consider these detailed arguments and adjudicate upon them as the accountable person is entitled to succeed even with reference to the undisputed facts already found and with reference to section 34(3). It is for this reason that we do not consider the argument for and against the application of the decision of the Andhra Pradesh High Court in Smt. Lakshmisagar Reddys case (supra) which dealt with a similar death compensation paid to legal representatives under the service rules of Indian Airlines Corporation.
5. In the result, the order of the first appellate authority is upheld. The departmental appeal is dismissed.