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Issues Involved:
1. Whether trust properties passed on death under sections 5, 7, or 11 of the Estate Duty Act, 1953. 2. Inclusion of "Garden Reach" property in the principal value under section 10 of the Estate Duty Act. 3. Inclusion of furniture value in the principal value of the estate under section 10 of the Estate Duty Act. Issue 1: Trust Properties Passing on Death The primary issue was whether the trust properties, including movable assets and immovable properties like "Readymoney house," passed on the deceased's death under sections 5, 7, or 11 of the Estate Duty Act, 1953. The Tribunal found that the deceased had transferred his life interest in the Baronetcy Trust properties long before his death, thus, his life interest did not pass on death under sections 5 or 7. However, the Tribunal concluded that the deceased continued to reside in "Readymoney house" not as a statutory tenant but as a baronet, making the value of "Readymoney house" includible in the estate's principal value. The High Court, referencing the judgment in CED v. Official Trustee, Maharashtra State, held that the deceased's life interest in the Baronetcy Trust, enjoyed as a holder of office, fell under section 7(4) and was not liable to estate duty under sections 5 or 7. The court concluded that the life interest, whether assigned or not, was not assessable to estate duty as it did not pass on death nor could be deemed to have passed by cesser of interest under section 7(1) or section 5. Issue 2: Inclusion of "Garden Reach" Property The Tribunal considered whether the "Garden Reach" property in Poona, transferred to the deceased's wife, was includible in the estate's principal value under section 10. The Tribunal found that the deceased had no beneficial interest in the property after 1957, and the deceased's wife had obtained the property through a reduction of capital in 1958. The Tribunal concluded that the deceased had not reserved any benefit for himself and had not resided in the property, thus, section 10 did not apply. The High Court affirmed this view, referencing the Supreme Court decision in CED v. Umesh Rudhra, which held that section 10 does not apply when a residential house is gifted to a wife and the donor continues to reside there with her. Issue 3: Inclusion of Furniture Value The Tribunal addressed whether the value of furniture in "Readymoney House" and the Poona property was includible in the estate's principal value under section 10. Given that the properties themselves were not includible in the estate, the Tribunal concluded that the furniture's value was also not liable to estate duty. The High Court affirmed this conclusion, stating that since the properties were not includible in the principal value, the furniture within them could not be liable to estate duty. Conclusion: The High Court answered all questions in favor of the assessee, concluding that the trust properties, including "Readymoney house" and "Garden Reach," and the furniture within them, were not includible in the principal value of the deceased's estate under the relevant sections of the Estate Duty Act, 1953. No order as to costs was made.
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