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Issues Involved:
1. Whether the entire value of the property known as "Mayavaram Lodge" or any portion of its value is liable to be included in the principal value of the estate of the deceased as property deemed to have passed on his death. 2. Whether the deed dated March 11, 1955, constituted a partition deed or a deed of gift. 3. The applicability of Section 10 of the Estate Duty Act, 1953, regarding the exclusion of the donor from the possession and enjoyment of the gifted property. Issue-Wise Detailed Analysis: 1. Inclusion of Mayavaram Lodge in the Principal Value of the Estate: The primary issue was whether the entire value of "Mayavaram Lodge" should be included in the principal value of the deceased's estate. The Assistant Controller of Estate Duty included Rs. 1,50,000 in the estate value, arguing that the deceased retained a direct benefit from the property by leasing it back shortly after the gift. The High Court partially agreed, concluding that only the value of the right to possession and enjoyment retained by the deceased as a lessee should be included, not the entire property value. However, the Supreme Court overturned this, holding that the entire value of Mayavaram Lodge should be included in the estate as the deceased was not entirely excluded from the property or any benefit by contract or otherwise, as required by Section 10 of the Estate Duty Act. 2. Nature of the Deed Dated March 11, 1955: The respondent contended that the deed executed on March 11, 1955, was a partition deed of joint family properties. The Assistant Controller and the Board of Direct Taxes rejected this, finding the property to be the self-acquired property of the deceased, with no evidence of it being treated as joint family property. The High Court did not find it necessary to address this issue in detail, assuming the deed to be a gift for the sake of argument. The Supreme Court upheld this view, stating there was no sufficient ground to remand the case to determine if the deed constituted a partition deed. 3. Applicability of Section 10 of the Estate Duty Act, 1953: Section 10 stipulates that for a gift to be excluded from estate duty, the donee must assume immediate and exclusive possession and enjoyment of the property, and the donor must be entirely excluded from any benefit. The Supreme Court emphasized that both conditions are cumulative. The High Court's view that only the value of the right to possession and enjoyment should be included was rejected. The Supreme Court referred to precedents like George Da Costa v. Controller of Estate Duty, which clarified that if the donor retains any benefit, the entire property value is liable for estate duty. The Court also discussed similar cases from Australian and New South Wales law, reinforcing that any retained benefit by the donor, even under a lease, results in the entire property's inclusion in the estate. Conclusion: The Supreme Court concluded that the entire value of Mayavaram Lodge should be included in the principal value of the deceased's estate, as the deceased was not entirely excluded from the property or any benefit derived from it. The appeal was accepted, and the High Court's partial favor to the assessee was overturned in favor of the revenue. The judgment clarified the interpretation of Section 10 of the Estate Duty Act, reinforcing the requirement for complete exclusion of the donor from the gifted property to avoid estate duty.
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