1989 (1) TMI 77 - HC - Income Tax

Summary

Issues Involved:
1. Whether the deceased was domiciled in India at the time of his death.
2. Whether the exemption under section 21 of the Estate Duty Act was available to the deceased in respect of his movable properties in Ceylon.

Issue-wise Detailed Analysis:

1. Domicile of the Deceased:
The primary issue was whether the deceased, M.T. Veerappa Pillai, was domiciled in India at the time of his death. The Tribunal had to determine if the deceased had abandoned his domicile of origin in India and acquired a domicile of choice in Ceylon. The deceased was born in India and moved to Ceylon in 1939, where he acquired properties and married a Ceylonese woman. Despite living in Ceylon for 25 years and applying for citizenship, the application was not granted during his lifetime. The Assistant Controller of Estate Duty found that the deceased had not abandoned his domicile of origin in India, as he frequently visited India, owned properties there, and remitted cash to India. The Appellate Controller, however, concluded that the deceased had acquired a domicile of choice in Ceylon. The Tribunal reversed this, stating that the deceased's application for citizenship did not establish an intention to abandon his Indian domicile. The Tribunal held that the deceased remained domiciled in India, and the High Court agreed, noting that the deceased's continued ownership of properties in India, frequent visits, and bequests to his Indian wife indicated that he had not abandoned his domicile of origin.

2. Exemption under Section 21 of the Estate Duty Act:
The second issue was whether the deceased's movable properties in Ceylon were exempt from estate duty under section 21 of the Estate Duty Act. Section 21(1)(b)(i) of the Act exempts movable properties situated outside India if the deceased was not domiciled in India at the time of death. Given the finding that the deceased was domiciled in India, the exemption under section 21 was not applicable. The High Court emphasized that the onus of proving a change in domicile lies on the person asserting it. The accountable person failed to provide sufficient evidence that the deceased had a fixed and settled intention to permanently reside in Ceylon. The Court also noted that the deceased's application for Ceylonese citizenship, which was not granted, did not demonstrate an unequivocal intention to sever ties with India.

Conclusion:
The High Court concluded that the deceased, M.T. Veerappa Pillai, had not abandoned his domicile of origin in India and had not acquired a domicile of choice in Ceylon. Consequently, the movable properties in Ceylon were not exempt from estate duty under section 21 of the Estate Duty Act. The questions referred to the Court were answered in the affirmative and against the accountable person, with the Revenue entitled to costs of the reference.