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Interpretation of section 2(15) of the Estate Duty Act regarding property passing on death in a Hindu undivided family partition. Analysis: The case involved a question of law referred by the Income-tax Appellate Tribunal regarding the inclusion of a sum of Rs. 49,545 as property passing on death in a Hindu undivided family partition under the Estate Duty Act. The deceased, a karta of a Hindu undivided family, had effected a partition through a family arrangement, resulting in an unequal distribution of assets among family members. The Assistant Controller of Estate Duty included the deficit amount in the taxable estate, considering it as the value of interest relinquished by the deceased. However, the Appellate Controller and the Tribunal held that the unequal partition did not constitute a gift or disposition, relying on previous court decisions. The main contention revolved around whether the unequal partition in a Hindu undivided family constitutes a disposition under Explanation 2 to section 2(15) of the Estate Duty Act. The department argued for inclusion based on interpretations from other High Court and Supreme Court judgments, emphasizing the element of disposition in such transactions. On the contrary, the accountable person relied on the Tribunal's decision and previous court rulings, asserting that a partition in a Hindu undivided family does not involve a transfer or disposition of property. The High Court analyzed the concept of partition in a Hindu undivided family, highlighting that it does not involve a transfer of property but is a process of transforming joint enjoyment into separate ownership. The court referred to various court decisions, including those by the Supreme Court, which held that a partition in a Hindu undivided family does not amount to a disposition. The court emphasized that unless a transaction amounts to a disposition, unequal distribution in a partition does not hold significance in determining property passing on death. Furthermore, the court examined the provisions of section 2(15) of the Estate Duty Act and Explanation 2, concluding that in the case at hand, there was no settlement of debt or extinguishment of rights that would trigger the application of Explanation 2. The court distinguished the case from previous judgments involving relinquishment of interest by a coparcener, clarifying that in a partition scenario, where the joint family remains intact, the concept of disposition does not apply. In conclusion, the High Court upheld the Tribunal's decision, ruling that the sum of Rs. 49,545 was not includible as property passing on death in the deceased's estate. The court answered the question referred in the affirmative, in favor of the accountable person, and awarded costs to the respondent.
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