Estate Duty-Scope of the word 'disposition' u/s 27(1). - Income Tax - 1305/CBDT

INSTRUCTION NO. 1305/CBDT Dated: February 1, 1980 The Madras High Court in the case of N.K. Rajamani Ammal Vs. Controller of Estate Duty (84 ITR 798) held that the word 'disposition' appearing in section 27(1) of the Estate Duty Act, 1953 refers to a bilateral or multilateral act and would not include the unilateral act of a person by which he throws his self acquired property into the common stock of the Hindu Undivided Family. The aforesaid decision of the Madras High Court was not found to be acceptable, but petition for leave to appeal to the Supreme Court was not authorised in view of the small revenue involved. A Special Leave petition has however, been filed in the Supreme Court against the Madras High Court Judgment in the case of C.E.D. Vs. Smt. Mookammal (110 ITR 581) which relied on the decision of the same court in N.K. Rajammani Ammal's case mentioned above. [ No SLP could be filed for certain reasons against a similar Madras High Court Judgment in the case of late Ladmal Bhandari, decided by Madras High Court in Tax Case Petition No. 351/1976]. 2. The Board are advised that such a declaration would amount to disposition within the meaning of section 27(1) Estate Duty Act. It can be regarded as disposition in favour of a relative if each of the members of the HUF existing at the time when self-acquired property has thrown into the hotchpotch can be covered by the expression 'relative' as defined in section 27(1) of the Estate Duty Act. In a case where only a few and not all the members of the HUF are covered by the expression 'relative' as defined under section 27(7), throwing of the property into the common hotchpotch would amount to disposition only to the extent of the shares of such members of the HUF as are covered by the definition of 'relative'.