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Issues Involved:
1. Whether the sum of Rs. 42,000 received by the dependants was liable to estate duty. Detailed Analysis: Issue 1: Whether the sum of Rs. 42,000 received by the dependants was liable to estate duty. The primary question referred for the court's opinion was whether the sum of Rs. 42,000 received by the dependants of the deceased was liable to estate duty. The Assistant Controller of Estate Duty, Jullundur, had included this amount in the estate of the deceased, arguing that it was property that passed on the death of the deceased. The Assistant Controller reasoned that the compensation was directly linked to the rights of the deceased as a fare-paying passenger, which converted into a right to receive compensation upon his death, thus making it part of the estate. Upon appeal, the Zonal Appellate Controller disagreed with this view, stating that the compensation was not receivable by the deceased but by his heirs upon his death. The Appellate Controller cited Nanavati's Treatise on Estate Duty and the decision in Feay v. Barnwell, concluding that such compensation was not taxable as it did not form part of the deceased's estate. The Income-tax Appellate Tribunal upheld the Zonal Appellate Controller's decision, emphasizing that property created on death cannot be subjected to estate duty as it does not pass on death. The High Court examined the relevant sections of the Estate Duty Act, particularly section 5 (the charging section), section 2(15) (definition of "property"), and section 2(16) (definition of "property passing on the death"). The court noted that the sum of Rs. 42,000 came into existence only after the death of the deceased and was not in existence during his lifetime. The court also analyzed the provisions of the Indian Carriage by Air Act, 1934, which governed the liability of the carrier in the event of death or injury to a passenger. The relevant rules from the First and Second Schedules of the Act indicated that the compensation was payable to specific members of the deceased's family and not to the estate of the deceased. The court concluded that the compensation did not form part of the estate passing on the death of the deceased. The court rejected the department's argument that the deceased had created an interest capable of passing on death by purchasing the air ticket. The court also dismissed the applicability of section 15 of the Estate Duty Act, which deals with annuities or other interests provided by the deceased. The court supported its conclusion with references to legal treatises and previous decisions, including those from the Jammu and Kashmir High Court, which held that compensation under similar statutes did not form part of the estate passing on death. Conclusion: The High Court answered the referred question in the negative, ruling that the sum of Rs. 42,000 received by the dependants was not liable to estate duty. The court held that the compensation did not form part of the estate of the deceased and thus could not be subjected to estate duty. The assessee was awarded costs assessed at Rs. 250.
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