1972 (1) TMI 37 - HC - Income Tax

Estate Duty Act 1953 - Whether on the facts and in the circumstances of the case the Tribunal was right in law in excluding the value of the property in question from the assessment holding that the deceased was not competent to dispose of the same and that it did not pass on her death ? All that section 6 says is that the property which the deceased at the time of his death was competent to dispose of shall be deemed to pass on his death. Irrespective of the fact that the husband was the true owner of the property there was nothing to prevent the wife a minute before her death to transfer the property. The legal title against the entire world expecting the true owner vested in her and she had thus the right to dispose of that right and once that right is conceded the property shall be deemed to pass on her death and would therefore, be liable to the levy of estate duty under section 5 of the Act

Summary

Issues:
Interpretation of Estate Duty Act, 1953 - Competency of deceased to dispose of property - Benami transaction - Inclusion of property in estate for levy of estate duty.

Detailed Analysis:

The case involved a dispute regarding the estate of a deceased individual, Savitri Devi, who had two properties in her name at the time of her death. The husband of the deceased claimed to be the real owner of the property, arguing that the deceased was a mere benamidar. The dispute centered around whether the property should be included in the deceased's estate for the levy of estate duty under section 5 of the Estate Duty Act, 1953.

The Tribunal, after considering the evidence, found that the accountable person (husband) had purchased the property in the name of his wife and had funded the construction of a building on the plot. The Tribunal held that the husband was the real owner of the property. However, the matter needed to be decided based on the interpretation of section 6 of the Act, which states that property the deceased was competent to dispose of shall be deemed to pass on death.

The accountable person argued that the wife was not a benamidar and that no title in the property passed to her at any point. The Tribunal's decision was based on the argument that the deceased, despite not being the true owner, had the legal right to dispose of the property, as the legal title vested in her. Therefore, the property should be deemed to pass on her death for estate duty purposes.

The Tribunal's decision was supported by legal precedents and the language of the Act. The Tribunal emphasized that the deceased's competency to dispose of the property was not dependent on actual ownership but on legal rights. The Tribunal's reasoning aligned with the Supreme Court's observations on benami transactions and legal ownership.

Ultimately, the High Court answered the question in the negative, in favor of the department and against the assessee. The Court upheld the Tribunal's decision that the property should be included in the deceased's estate for the levy of estate duty under the Act, based on the interpretation of section 6 and the legal principles surrounding benami transactions and property ownership. No costs were awarded in the judgment.