1974 (10) TMI 27 - HC - Income Tax

Issues Involved:
1. Absolute ownership of the deceased under Section 14 of the Hindu Succession Act, 1956.
2. Devolution of the deceased's interest under Section 15 of the Hindu Succession Act.
3. Classification of the deceased's interest as 'property' under Section 2(15) of the Estate Duty Act, 1953, and its passage under Section 5 or 6.
4. Liability of the deceased's interest to estate duty under the Estate Duty Act, 1953.
5. Accountability of the applicant under Section 53 read with Section 2(12) of the Estate Duty Act (not pressed).

Detailed Analysis:

1. Absolute Ownership Under Section 14 of the Hindu Succession Act, 1956:
The court examined whether Subhadra's interest in the joint family property, acquired upon her husband's death in 1944, became absolute under Section 14 of the Hindu Succession Act, 1956. The accountable person contended that since no partition was claimed or effected, Subhadra's interest did not ripen into an absolute estate. The court rejected this contention, stating that the term "possessed" in Section 14 is used broadly to include both actual and constructive possession. The court cited several precedents, including *Kotturuswami v. Veeravva* and *Mangal Singh v. Smt. Rattno*, to support its view that Subhadra's limited estate was converted into absolute ownership irrespective of partition.

2. Devolution Under Section 15 of the Hindu Succession Act:
The court addressed whether Subhadra's interest in the joint family property devolved on her heirs under Section 15 of the Hindu Succession Act. The accountable person argued that the right of other coparceners to succeed by survivorship would revive upon Subhadra's death, merging her interest with theirs. The court dismissed this argument, holding that Subhadra's absolute ownership under Section 14 meant that her interest would devolve by succession under Section 15. Thus, her interest would be included in the estate liable to estate duty.

3. Classification as 'Property' Under Section 2(15) of the Estate Duty Act, 1953:
The court considered whether Subhadra's interest in the joint family property was 'property' under Section 2(15) of the Estate Duty Act, 1953, and whether it passed under Sections 5 or 6. The accountable person contended that Subhadra's fluctuating interest could not be ascertained in specie for estate duty purposes. The court refuted this, stating that her interest would crystallize upon her death, thus becoming property that passed to her heirs. The court emphasized that her interest, though initially fluctuating, became absolute under Section 14 of the Hindu Succession Act and would pass as property under Section 15.

4. Liability to Estate Duty:
The court concluded that Subhadra's interest in the joint family property was liable to estate duty under Section 5 of the Estate Duty Act. It further held that Subhadra, as the full and absolute owner of her interest, had the right to dispose of it by will or otherwise, making it property passing on her death under Section 6 of the Estate Duty Act.

5. Accountability (Not Pressed):
The question of whether the applicant was an accountable person under Section 53 read with Section 2(12) of the Estate Duty Act was not pressed by the accountable person's advocate.

Conclusion:
The court answered questions 1, 2, 3, and 4 in the affirmative, in favor of the revenue and against the assessee. Question 5 was not pressed. The accountable person was ordered to pay the costs of the reference to the revenue.

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