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Issues:
1. Interpretation of the deed of partition and relevant provisions of the Estate Duty Act. 2. Applicability of section 7 of the Estate Duty Act. 3. Creation of a floating charge and its impact on section 7. 4. Distinction between a charge and a mortgage. 5. Determination of whether a charge creates an interest in the property. 6. Benefit accrued by the sons upon the death of the deceased. Detailed Analysis: The judgment delivered by the High Court of Allahabad involved the interpretation of the deed of partition and the relevant provisions of the Estate Duty Act. The question referred to the court was whether the deceased had an interest in the property which terminated on her death, leading to a benefit accruing to the sons by the termination of such interest under section 7 of the Estate Duty Act. The deceased, Rani Kalawati, had relinquished her claims to the property in exchange for a monthly annuity from her sons. The contention raised was that section 7 was not applicable as the deceased did not hold any interest in the property, and no benefit arose from the cessation of her interest. Additionally, the argument was made that the interest of the deceased was not quantifiable under section 40 of the Act. Regarding the applicability of section 7, it was highlighted that for the section to be triggered, the deceased must have had an interest in the property, and a benefit should have arisen from the termination of that interest. The partition deed outlined that Rani Kalawati was entitled to an annuity in consideration of relinquishing her claims to the estate. The deed created a charge on the properties held by the sons, both personal and ancestral, for the payment of the annuity. The court rejected the argument that the charge created a floating charge, emphasizing that specific properties were charged, including ancestral properties received by the sons on partition. The distinction between a charge and a mortgage was crucial in determining the deceased's interest in the property. While a charge does not transfer an interest in the property like a mortgage, it creates a right to receive payment out of specified properties. The court held that Rani Kalawati had an interest in the property to the extent of the annuity payable to her, as she had the right to realize the annuity from the specified properties. Upon her death, the sons benefitted from the termination of the charge, absolving them of the liability to pay the annuity. The judgment also addressed the argument that the discharge of liability was a benefit to the sons, even if there was no direct financial gain. The court distinguished previous cases where the interest of the deceased was not quantified, emphasizing that in this case, Rani Kalawati was granted a definite annuity, and specific properties were charged for its payment. Ultimately, the court ruled in favor of the department, affirming that the deceased had an interest in the property, and a benefit accrued to the sons upon her death.
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