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Issues Involved:
1. Whether the ante-adoption agreement dated April 18, 1931, and the ratification agreement dated December 22, 1934, amounted to a settlement or disposition of the properties in question. 2. Whether the estates in question covered by the agreements are includible in the estate of the deceased by virtue of section 24(1) of the Estate Duty Act. Detailed Analysis: Issue 1: Settlement or Disposition of Properties The court examined whether the agreements dated April 18, 1931, and December 22, 1934, amounted to a "disposition" of the properties in question under section 24 of the Estate Duty Act, 1953. The facts revealed that Anandibai, after her husband's death, adopted Ramachandrarao with government permission. An ante-adoption agreement was made on April 18, 1931, between Anandibai and the natural father of Ramachandrarao, which allowed Anandibai to possess and enjoy certain watan lands and a house during her lifetime. The agreement was signed by the natural father on behalf of the minor Ramachandrarao. Clause (6) of the agreement specified that Anandibai would possess and enjoy the watan lands for her lifetime without the right to dispose of them. The court noted that this agreement was valid by custom, as established by the Privy Council in Krishnamurthi Ayyar v. Krishnamurthi Ayyar, which upheld arrangements made on adoption where the widow enjoys the property during her lifetime. The court concluded that by clause (6) of the agreement, the natural father of Ramachandrarao, on his behalf, gave up the right to possess and enjoy the watan lands in favor of Anandibai, thus constituting a "disposition" of the properties. The court rejected the department's argument that the agreement was merely a family arrangement, noting that Anandibai did not give up any rights under the agreement. The court also considered the ratification agreement dated December 22, 1934, which reiterated that Anandibai would enjoy the properties for her lifetime. This agreement was signed by Ramachandrarao after he attained majority, further confirming the disposition of the properties. Issue 2: Inclusion of Estates in the Deceased's Estate The court examined whether the value of the watan lands should be included in Anandibai's estate under section 24(1) of the Estate Duty Act. Section 24(1) states that property shall not be deemed to pass by reason only of its reverter to the disponer if an interest is conferred on a person for their lifetime and they retain possession of it. The court noted that Anandibai had a life interest in the watan lands, which ceased upon her death. The court found that the agreements constituted a disposition of the properties, conferring a life interest on Anandibai. Therefore, the value of the watan lands was not includible in her estate by virtue of section 24(1). Conclusion: The court reframed and answered the first question, stating that the agreement of April 18, 1931, and, if not, the agreement of December 22, 1934, amounted to a "disposition" of the properties within the meaning of section 24 of the Estate Duty Act. For the second question, the court held that the value of the watan lands was not includible in Anandibai's estate by reason of section 24(1). The court ordered the applicant to pay the costs of the reference.
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