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1991 (11) TMI 54 - SC - Indian LawsWhether the act of a member of a joint family by which he impresses his individual property with the character of joint family property or throws it into the hotchpotch of the joint family or blends it with the joint family property is a disposition within the meaning of the Estate Duty Act, 1953 ? Held that - We endorse this reasoning and think that the High Court was right in holding, in the present cases, that the act of blending did not result in the gift of immovable properties within the meaning of the statute and that Rajamani Ammal 1972 (1) TMI 9 - MADRAS High Court required no reconsideration because of Ranganayaki Ammal / Trikamlal 1976 (7) TMI 61 - SUPREME Court . Appeal dismissed.
Issues Involved:
1. Whether the act of a member of a joint family impressing his individual property with the character of joint family property constitutes a "disposition" under the Estate Duty Act, 1953. 2. Whether the inclusion of the value of three properties as part of the estate of the deceased and passing on his death was justified. 3. Whether the addition of Rs. 46,800 as a debt discharged within two years prior to the death was justified. Detailed Analysis: Issue 1: Disposition under the Estate Duty Act The primary question was whether the act of a member of a joint family impressing his individual property with the character of joint family property or "blending" it with the joint family property constitutes a "disposition" under the Estate Duty Act, 1953. The Assistant Controller of Estate Duty held that such declarations were "dispositions" within the meaning of the second Explanation to section 2(15) of the Act, amounting to gifts made within two years of the date of death, and thus, the subject matter of the gift was liable to be assessed as part of the estate passing on death under section 9 of the Act. The Madras High Court had previously ruled in A. N. K. Rajamani Ammal v. CED [1972] 84 ITR 790 that the act of blending does not constitute a "disposition" within the meaning of section 27(1) of the Estate Duty Act. The court observed that the word "disposition" refers to a bilateral or multilateral act, not a unilateral act, and thus, the unilateral act of throwing self-acquired property into the common stock of the joint family does not qualify as a disposition. Issue 2: Inclusion of Property Value in Estate The Assistant Controller included the value of three properties, taken at Rs. 1,22,500, in the principal value of the estate, asserting that these properties, which went to other family members due to the declarations and partition, were liable to be included as part of the estate deemed to pass on the death of the deceased by the application of section 9 read with section 27(1) and section 2(15) of the Act. The Tribunal, following the decision in Rajamani Ammal, held that the sum could not be included in the value of the estate passing on death. The Supreme Court affirmed the Tribunal's decision, agreeing that the act of blending does not create any right enforceable against the blender or his property but only brings to the surface rights already latent and inherent in the others. The act of blending does not result in the extinguishment of any right of the blender with a correlative conferral of benefit on others. Issue 3: Addition of Rs. 46,800 as Debt The Assistant Controller also added back Rs. 46,800, being the loan taken by the deceased from the Hindu undivided family and discharged within two years prior to the death, in computing the principal value of the estate by reason of the provisions of section 46(2) of the Act. This addition was contingent on the inclusion of the value of the three properties as part of the estate. Since the Supreme Court upheld the Tribunal's conclusion that the properties could not be included in the estate, the addition of Rs. 46,800 was also not justified. Conclusion: The Supreme Court dismissed the appeals, holding that the act of impressing individual property with the character of joint family property does not constitute a "disposition" under the Estate Duty Act. Consequently, the inclusion of the value of the properties and the addition of the debt were not justified. The decision in Rajamani Ammal was upheld, and the appeals were dismissed without costs.
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