1968 (4) TMI 8 - HC - Income Tax

Estate Duty Act, 1953 - value of the house property - includibility in the principal value of the estate of the deceased

Summary

Issues Involved:
1. Whether the value of house property No. 33, Apcar Garden, was correctly included in the principal value of the estate of the deceased as property passing or deemed to pass on his death.

Detailed Analysis:

Issue 1: Inclusion of Property Value in the Estate of the Deceased

The primary question is whether the house property No. 33, Apcar Garden, should be included in the estate of the deceased, Abul Mansur, under the Estate Duty Act. The property was purchased by Mrs. Shamsun Nehar Mansur, the deceased's wife, through an indenture of conveyance dated February 21, 1947, for Rs. 20,000. The title deed explicitly states that the purchase was made "with her own money and for her own benefit and enjoyment," and the husband had no involvement in the transaction.

The Assistant Controller of Estate Duty included the property in the estate, arguing that the deceased provided the purchase consideration and lived in the property until his death, thus retaining a beneficial interest. However, the title deed does not support this claim, as it does not indicate a benami transaction or any involvement of the husband.

The appellate order by the Board also included the property in the estate, reasoning that even if the property was not a benami purchase, section 10 of the Estate Duty Act would apply since the deceased was not entirely excluded from possession and enjoyment of the property. The Board's assumption that the funds were provided by the husband lacks legal evidence, as neither the title deed nor the correspondence between the appellant's lawyer and the taxing authorities supports this claim. Additionally, the property was excluded from the wealth-tax assessment of the deceased.

The Supreme Court's decision in George Da Costa v. Controller of Estate Duty is relevant here. The Court held that under section 10 of the Estate Duty Act, the donee must assume bona fide possession and enjoyment of the property to the exclusion of the donor. The facts in this case differ significantly from the Supreme Court case, as there is no pre-existing right of the husband in the property, and his presence in the house is due to marital rights rather than proprietary rights.

The Privy Council decision in Clifford John Chick v. Commissioner of Stamp Duties and the case of Attorney-General v. Seccombe further clarify that the exclusion of the donor must be from the proprietary right in the property, not from marital rights. The husband's presence in the house for coverture or consortium does not constitute possession or enjoyment of the property in the context of section 10.

The amendment to section 10 in 1965, which excludes a house taken under a gift to the spouse from being deemed to pass on the donor's death due to the donor's residence, is not retrospective and does not apply to this case. However, it indicates the legislative intent to prevent such issues in the future.

Conclusion:
The value of house property No. 33, Apcar Garden, cannot be included in the principal value of the estate of the deceased. This conclusion is based on the lack of legal evidence that the husband provided the purchase money and the fact that his presence in the house is due to marital rights, not proprietary rights. Therefore, the question is answered in the negative, and there will be no order as to costs.