1986 (1) TMI 98 - SC - Income Tax

Whether estate duty was payable on the whole of the property or not would depend on whether the deceased, Kamlashankar Gopalshankar, had disposing power over the share of Mahendraba inherited by him on her death or not? Held that - This was mutual will. The husband, Kamlashankar Gopalshankar, received the benefit under the will after the death of Mahendraba. It became irrevocable by him after her death. Therefore, he had no disposing power over the share of Mahendraba in the property. In the premises being a settled property , estate duty having been paid on the death of one of the parties, the accountable person was entitled to exemption under section 29 of the Act. In the premises, the High Court was not right in its conclusion. The appeal is accordingly allowed and the judgment under appeal is set aside and the question is answered in the affirmative and in favour of the accountable person

Issues Involved:
1. Exemption from estate duty under Section 29 of the Estate Duty Act, 1953.
2. Construction and interpretation of a joint will.
3. Determination of whether the will was joint or joint and mutual.
4. Competence of the deceased to dispose of the property.

Issue-wise Detailed Analysis:

1. Exemption from Estate Duty under Section 29 of the Estate Duty Act, 1953:

The primary issue was whether the appellant was entitled to exemption from estate duty under Section 29 of the Estate Duty Act, 1953. Section 29 provides that if estate duty has already been paid on settled property on the death of one spouse, it shall not be payable again on the death of the other spouse unless the latter was competent to dispose of such property.

The court examined whether the property in question was "settled property" and whether the deceased, Kamlashankar Gopalshankar, had the disposing power over the property inherited from his wife, Mahendraba. The court concluded that the property was indeed settled property and that the deceased did not have the disposing power over his wife's share, thereby entitling the appellant to exemption under Section 29.

2. Construction and Interpretation of a Joint Will:

The court analyzed the joint will executed by Kamlashankar Gopalshankar and his wife, Mahendraba, to determine its nature and the implications for estate duty. The will stipulated that upon the death of one spouse, the survivor would become the owner of the property and entitled to its rents and income. The will further provided that after the death of the survivor, the property would be bequeathed to their grandsons.

The court found that the will was intended to keep the property intact for the ultimate beneficiaries, the grandsons, and that the survivor was not competent to revoke or alter the disposition made in the will.

3. Determination of Whether the Will was Joint or Joint and Mutual:

The court examined whether the will was merely a joint will or a joint and mutual will. A joint will is revocable at any time by either party, while a joint and mutual will involves an agreement not to revoke the will after the death of one of the executants.

The court concluded that the will in question was a joint and mutual will, as it contained an implied agreement that the survivor would not revoke or alter the will after receiving the benefit under it. This conclusion was based on the language of the will and the intention of the executants to preserve the property for their grandsons.

4. Competence of the Deceased to Dispose of the Property:

The court addressed whether the deceased, Kamlashankar Gopalshankar, had the disposing power over the property inherited from his wife. The court found that the deceased did not have the disposing power, as the will created a mutual agreement that the property would remain intact for the ultimate beneficiaries.

The court emphasized that the deceased could not have parted with the property during his lifetime, as he had received the benefit under the will after his wife's death. This lack of disposing power meant that the property was "settled property" under Section 29, and the appellant was entitled to exemption from estate duty.

Conclusion:

The court allowed the appeal, set aside the judgment of the High Court, and answered the question in favor of the accountable person. The court held that the will was a joint and mutual will, and the deceased did not have the disposing power over the property. Therefore, the property was settled property, and estate duty had already been paid on the death of one of the parties. The appellant was entitled to exemption under Section 29 of the Estate Duty Act, 1953. The accountable person was awarded the costs of the appeal.

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