1968 (10) TMI 28 - HC - Income Tax

Estate Duty - value of the superstructure built by the deceased on the land of the society - includibility in the principal value of the estate of the deceased

Issues Involved:
1. Validity of the gift of the superstructure to the sons.
2. Ownership of the superstructure at the time of the deceased's death.
3. Legal implications of the deceased's actions regarding the plot and superstructure.
4. Applicability of the maxim "quic quid plantatur solo, solo cedit" in Indian law.
5. Rights of the deceased in the plot and superstructure.
6. Transfer of possession and its legal consequences.
7. Inclusion of the superstructure's value in the principal value of the estate for estate duty purposes.

Detailed Analysis:

1. Validity of the Gift of the Superstructure to the Sons:
The deceased attempted to gift plot No. 1 to Sakarchand and plots Nos. 1-A and 1-B to Ramanlal on 8th March, 1951. However, the Assistant Controller argued that since the superstructure was immovable property, it could not be transferred without a registered instrument, rendering the gift invalid. The court noted that the deceased had no interest in the plots themselves, only in the superstructure he built.

2. Ownership of the Superstructure at the Time of the Deceased's Death:
The court examined whether the superstructure continued to belong to the deceased at the time of his death. The Assistant Controller included the value of the superstructure in the estate, arguing that there was no valid transfer. The court found that the deceased lost his right to the superstructure when he handed over possession to his sons without removing it.

3. Legal Implications of the Deceased's Actions Regarding the Plot and Superstructure:
The deceased divided the plot and transferred possession to his sons, which was recorded in a declaration and recognized by the society. The society passed a resolution transferring the plots to the sons' names and updated its records accordingly. The court analyzed the true nature of this transaction, concluding that the deceased's actions effectively ended his possession and rights to the superstructure.

4. Applicability of the Maxim "quic quid plantatur solo, solo cedit" in Indian Law:
The court emphasized that this English law maxim does not apply in India. Indian law recognizes dual ownership, where the land can belong to one person and the structure to another. The court cited precedents, including decisions from the Privy Council and the Supreme Court, affirming that the superstructure could belong to the deceased while the land belonged to the society.

5. Rights of the Deceased in the Plot and Superstructure:
The deceased was lawfully in possession of the plot under an implied agreement for a lease from the society. The court noted that the deceased's right was to remove the superstructure if his possession ended. The deceased's lawful possession and construction of the superstructure were recognized, but his right to the superstructure ceased when he transferred possession to his sons without removing it.

6. Transfer of Possession and Its Legal Consequences:
The court found that the deceased's request to the society to transfer the plots to his sons and the society's subsequent resolution effectively transferred possession and rights to the sons. The deceased's failure to remove the superstructure when transferring possession meant he lost his rights to it, and the superstructure became part of the sons' possession.

7. Inclusion of the Superstructure's Value in the Principal Value of the Estate for Estate Duty Purposes:
The court concluded that the superstructure should not be included in the principal value of the deceased's estate. The deceased lost his rights to the superstructure when he transferred possession to his sons without removing it. Therefore, the superstructure was not part of the deceased's estate at the time of his death.

Conclusion:
The court answered the question in the negative, stating that the value of the superstructure built by the deceased should not be included in the principal value of his estate. The Controller was ordered to pay the costs of the reference to the accountable person.

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