1968 (12) TMI 16 - HC - Income Tax

Estate Duty Act, 1953 - inclusion of value of the property settled (in favour of the deceased s wife, three sons and two grandsons) in the estate of the deceased u/s. 9 of the Estate Duty Act

Summary

Issues Involved:
1. Inclusion of the value of property settled in favor of the deceased's family in the estate under section 9 of the Estate Duty Act.
2. Determination of ownership of 136.82 acres of agricultural land without a registered deed of gift for the purpose of the Estate Duty Act.

Detailed Analysis:

Issue 1: Inclusion of Property Value under Section 9 of the Estate Duty Act

The primary question was whether the value of property settled in favor of the deceased's wife, three sons, and two grandsons by deeds dated 29th May 1955 and 30th May 1955 should be included in the deceased's estate under section 9 of the Estate Duty Act. The accountable persons argued that the possession and enjoyment of the property by the donees commenced in 1953, and therefore, the property should not be included in the estate.

The court rejected this argument, emphasizing that under section 9, a gift must be bona fide made two years or more before the death of the deceased to be excluded from the estate. The deeds in question were executed within two years prior to the deceased's death, making the property includible in the estate. The court clarified that the Estate Duty Act does not provide for a situation where possession and enjoyment alone, without legal title transfer via a registered deed, would suffice to exclude the property from the estate.

Issue 2: Ownership of 136.82 Acres of Agricultural Land

The second issue addressed whether 136.82 acres of agricultural land, valued at Rs. 37,336, should be considered the deceased's property at the time of death in the absence of a registered deed of gift. The Assistant Controller of Estate Duty found that the deceased had delivered possession of this land to his first son in 1953 but had not executed any deed of settlement.

The court held that for immovable property of the value of Rs. 100 or more, a registered instrument is necessary to effectuate a gift. Since there was no registered deed, the legal title of the 136.82 acres remained with the deceased, making the property part of the estate under section 6 of the Estate Duty Act. The court reinforced that the legal title must pass to divest the deceased of ownership, and mere possession and enjoyment by the donee are insufficient.

Conclusion

The court concluded that both the 408.71 acres of agricultural land settled by registered deeds within two years before the deceased's death and the 136.82 acres of land without a registered deed of gift were includible in the estate of the deceased for the purposes of the Estate Duty Act. The answers to both questions were in the affirmative and in favor of the department, with costs awarded to the department.