1970 (10) TMI 10 - HC - Income Tax

Hindu Succession Act, 1956 - properties left by Rajagopala Reddiar (Mitakshara Hindu) were partitioned by the widow and her children into four schedules - Whether the Tribunal was right in holding that the full value of the C schedule properties in the partition deed could be included in the dutiable estate of the deceased

Issues Involved:
1. Nature of the estate taken by Nagammal in the properties in schedule C.
2. Applicability of Section 14(1) of the Hindu Succession Act.
3. Applicability of Section 24 of the Estate Duty Act.

Detailed Analysis:

1. Nature of the Estate Taken by Nagammal in the Properties in Schedule C:
The core issue is the nature of the estate taken by Nagammal in the properties allotted to her in the partition deed dated December 16, 1953. The court noted that the partition deed explicitly stated that the widow, Nagammal, took schedule C with the restriction that, on her death, the properties would revert to the sons and daughters. This indicated that Nagammal took the properties under a legal right, as per Mitakshara Hindu law, which conferred upon her a limited estate known as the Hindu woman's estate or the Hindu widow's estate. The judgment emphasized that the estate she took was a limited one, as contemplated by the Mitakshara law, and not merely a restricted estate by virtue of a contract with her sons.

2. Applicability of Section 14(1) of the Hindu Succession Act:
The court held that Section 14(1) of the Hindu Succession Act applied to the estate taken by Nagammal. According to the judgment, if the case had arisen in British India, the widow would have been entitled to a Hindu woman's estate under the Hindu Women's Rights to Property Act, which would have been enlarged into an absolute estate under Section 14(1) of the Hindu Succession Act. The court found no substantial difference in the position of a Mitakshara Hindu widow in Travancore compared to British India. Therefore, the limited estate Nagammal took under the Mitakshara law was enlarged into an absolute estate when the Hindu Succession Act came into force in 1956. Since Nagammal died after the Act came into force, she left behind a full and absolute estate in schedule C.

3. Applicability of Section 24 of the Estate Duty Act:
The counsel for the accountable persons argued that the case fell within Section 24 of the Estate Duty Act, which would exclude the properties from being considered part of the dutiable estate. However, the court rejected this argument, stating that Section 24(1) could only apply if Section 14(1) of the Hindu Succession Act did not apply. Since the court held that Section 14(1) did apply, the argument under Section 24 of the Estate Duty Act did not hold water. The court also distinguished this case from the Andhra Pradesh High Court ruling in Kancharla Kesava Rao v. Controller of Estate Duty and the Full Bench ruling of the Madras High Court in Alladi Kuppuswami v. Controller of Estate Duty, noting that those cases involved different circumstances and legal principles.

Conclusion:
The court concluded that Nagammal took her share in schedule C properties under a pre-existing right as per Mitakshara Hindu law, which was a limited estate. This limited estate was enlarged into an absolute estate by Section 14(1) of the Hindu Succession Act when it came into force. Consequently, the full value of the properties in schedule C was rightly included in the dutiable estate of the deceased. The court answered the referred question in the affirmative, ruling against the accountable persons and did not pass any order regarding costs.

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