1981 (6) TMI 21 - HC - Income Tax

Summary

Issues Involved:

1. Applicability of Section 24 of the Estate Duty Act.
2. Determination of whether the properties passed or were deemed to pass on the death of Charushila Dassi under Section 5 and Section 7 of the Estate Duty Act.
3. Interpretation of the term "disposition" under Section 24 of the Estate Duty Act.
4. Validity of the claim for exemption of the properties from estate duty.

Issue-wise Detailed Analysis:

1. Applicability of Section 24 of the Estate Duty Act:

The accountable person claimed exemption under Section 24 of the Estate Duty Act for six properties retained by Charushila Dassi. The Deputy Controller and the Appellate Controller rejected the exemption, holding that Section 24 did not apply and the properties were liable to duty under Section 5. The Tribunal, however, held that Section 24 applied, as Charushila Dassi's interest was determinable on her death and she was not competent to dispose of the properties. The Tribunal concluded that the interest created in favor of Charushila Dassi came within the scope of "disposition" as contemplated by Section 24.

2. Determination of whether the properties passed or were deemed to pass on the death of Charushila Dassi under Section 5 and Section 7 of the Estate Duty Act:

Section 5(1) of the Estate Duty Act stipulates that estate duty is levied on all property passing on the death of a person. Section 7(1) includes property in which the deceased had an interest ceasing on their death, to the extent that a benefit accrues by the cessation of such interest. The Tribunal held that the properties did not pass on Charushila's death under Section 7, as her rights were derived from the 1935 agreement.

3. Interpretation of the term "disposition" under Section 24 of the Estate Duty Act:

The Tribunal interpreted "disposition" broadly, including the agreement of 1935 within its scope. However, the Revenue contended that "disposition" means giving away or giving up something that was one's own. The Supreme Court in CIT v. N. S. Getti Chettiar and CED v. Kancharla Kesava Rao emphasized that "disposition" involves a transfer of property. The High Court noted that the right of maintenance and residence for Charushila originated from the will of Aukshoy Kumar Ghosh, not the 1935 agreement, hence it was not a "disposition" by Debi Prasanna Ghosh.

4. Validity of the claim for exemption of the properties from estate duty:

The High Court concluded that the right to maintenance and residence was established by the will, and the 1935 agreement only enhanced the maintenance amount and specified the properties for Charushila's use. The High Court disagreed with the Tribunal, stating that the properties passed on Charushila's death under Section 5 and Section 7, and Section 24 did not apply. Therefore, the exemption claim was invalid.

Conclusion:

The High Court held that the Tribunal was incorrect in applying the exemption under Section 24 of the Estate Duty Act. The properties passed on Charushila Dassi's death and were liable to estate duty. The question was answered in the negative, favoring the Revenue, with each party bearing its own costs.