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TMI Blog1968 (10) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of sections 10 and 12 of the Estate Duty Act, 1953 ? " This reference arises out of the estate duty assessment pertaining to the estate of Haji Samsuddin Rajabali, who died on June 30, 1954. Prior to his death, the deceased had executed five gift deeds, all dated September 25, 1951 and by each gift deed he gifted different immovable properties mentioned in the relevant gift deed to each of his five sons. At the time of these gifts, three of the sons were minors and in their cases, the gifts were accepted by the mother as the guardian, of the three minor sons. The major sons themselves accepted the gifts on their behalf. In each of the five gift deeds certain conditions were laid down by the deceased. Two of the three minor sons, Badruddin and Shabuddin, were required to bear the maintenance expenses of the mother in equal shares. The third minor son, Rajabali, was required to bear the maintenance, education and marriage expenses of his sister, Nasif. Kikabhai and Sadaqali were required to bear the maintenance, education and marriage expenses of two other daughters of the deceased. In addition, the elder son, Kikabhai, was also required to allow the deceased to continue to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or sister, Zarabu Samsuddin, aged 15 years, and that such expenses will have to be borne by you till the time she is married and till she departs after marriage for joining the new place of her marriage. That you are entitled to enjoy and manage these properties at your sweet will subject to your responsibility in fulfilling the conditions stated above. In the remaining four gift deeds, the provision for the maintenance, education and marriage expenses of the other daughters of the donor is mentioned in exactly the same language as the passage we have cited above from the gift deed in Kikabhai's favour ; and so far as the wife of the donor, Sultanbu, is concerned, in the case of two minor sons, the condition was that they had to bear the appropriate expenses for their mother, Sultanbu, till she survived ; and each of the five gift deeds makes it abundantly clear that the gift deeds were being executed subject to these conditions in favour of the persons concerned. Under Mahomedan law, a gift with a condition is recognized and it has been stated in Mulla's Principles of Mahomedan Law, 16th edition, at page 155, section 164, that when a gift is made subject to a condition which d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made for maintenance in each of these five gift deeds. As regards the gift deed in favour of Kikabhai, one more condition has been imposed by the gift deed, viz., that Kikabhai should allow the shop to be run on the ground-floor of one of the properties indicated in the gift deed in favour of Kikabhai. By this condition it cannot be said that there is any derogation from the completeness of the grant because the donor did not reserve any dominion over the corpus of the property nor did he reserve any power over the dominion of the corpus but only stipulated that the shop should be allowed to run on the premises where it had been running in the past. Under these circumstances, that particular condition in the gift deed in Kikabhal's favour is a valid condition. The question then arises whether, under any of the provisions of the Act, the immovable properties included in these different gift deeds can be said to have so passed under any of the provisions of the Act, Regarding the condition of the user of the, shop in the gift deed in favour of Kikabhai, at the first blush it may appear that by the condition regarding the user of the ground-floor premises for the purposes of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8, section 370, that a father is bound to maintain his sons until they have attained the age of puberty. He is also bound to maintain his daughters until they are married. Section 370 occurs in Chapter XIX, which deals with maintenance of relatives and section 369 defines maintenance to include food, raiment and lodging. Maintenance of wife is also included in this Chapter but section 365 indicates that this topic has been dealt with under section 277 to section 279. Thus, so far as the principles of Mohamedan law are concerned, maintenance to be provided is in respect of food, raiment and lodging. Unlike the provisions contained in Hindu law under which a Hindu father is bound to maintain from the joint family property his unmarried daughters till their marriage and also to provide for their marriage expenses, there does not appear to be any provision under Mohamedan law under which there is an obligation on the father to provide for the marriage expenses of the daughter. Similarly there does not appear to be any obligation on the father to provide for the expenses for the education of the daughters. The only obligation under Mahomedan law is to provide for maintenance, which incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either of the preceding sub-clauses and the other party to a marriage with any such person or issue ; . . . " It is, therefore, clear that by imposing conditions for the maintenance of his wife and unmarried daughters the donor had made provision for the maintenance of his relatives in each of the five gift deeds ; but the question still remains whether the Explanation to section 12 would apply to such conditions. It is clear that there is no provision for the maintenance of the donor himself in this particular case and in each case there is only provision for the maintenance of one of the relatives, viz., either the daughter or the wife in each of the five gift deeds. The words : " for the maintenance of himself and any of his relatives " cannot be read to mean " for the maintenance of himself or for the maintenance of any of his relatives because if there is provision for the maintenance of the donor himself, there is no necessity to invoke the Explanation to section 12 and the word " and " occurring in this phrase cannot be read to mean " or " because in that event there is no necessity for the legislature to provide " for the maintenance of himself ". In the context in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the donor. Thus, this obligation of his own, which the donor has passed on to the donee concerned, is not for the life of the donor or is not for any other period determinable by the death of the donor but in each of the cases the beneficiary concerned is entitled to maintenance until marriage in the case of the unmarried daughters and till her death in the case of Sultanbu, the wife of the donor. Therefore, in our opinion, it is difficult to apply the provisions of section 12 to these gift deeds and to include the value of the properties covered by the five gift deeds as that of the value of the properties deemed to pass under section 12. Once it is held that the Explanation to section 12 is not applicable, it is clear that simply by making provision for the maintenance of his relatives, the donor cannot be deemed to have reserved an interest for himself and the relevant clause in each of the trust deeds is to be looked at purely from the point of view of determinability with reference to the death of the deceased under sub-section (1) of section 12. In our opinion, section 12(1) cannot apply and we have to consider whether the case falls under any of the other provisions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares. The deed gave him wide powers of management, and in particular provided that, in addition to reimbursing himself all expenses incurred in the administration of the trust, he was entitled to remuneration for all work done by him in managing the trust, property, on which he resided with his family in his capacity as trustee and manager, in the same manner and as fully and in all respect as if, he were not a trustee thereof. The testator continued to manage the trust property until his death, receiving certain varying sums annually as remuneration, and after deducting those and other outgoings and expenses he divided the profits from the property into five equal shares, crediting one share to himself and one share to each of his children. The children's shares, he applied during their minority for their maintenance and education, and paid them to the children when they came of age. The relevant contention regarding the maintenance of the minor children is dealt with in the report at page 72 thus : " But the statute requires not only exclusion of the donor but also exclusion of any benefit to him, and it was on that matter that the argument turned. It appears from the case th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase. In Clifford John Chick v. Commissioner of Stamp Duties, Oakes's case came up for consideration before the Privy Council, and it was observed : " It must be observed that in Oakes's case the Board appears to have been dealing with the second limb of the sub-section, the question being whether the donor was entirely excluded from any benefit to him of whatsoever kind or in any way whatsoever. It is possible that in the consideration of this very difficult part of the sub-section it may be pertinent in some cases to inquire whether the benefit derived by the donor is one that impairs or detracts from the donee's enjoyment of the gift. Their Lordships, with great respect, think that this is a matter which may require further examination, but, as they have already said, they are clearly of opinion that it is not a relevant consideration whether the question arises under the first limb of the sub-section and is whether the donor has been entirely excluded from the subject-matter of the gift..." And it was indicated in that case that, in that particular case, they were not concerned with the second limb of the sub-section. It is true that in Oakes's case, Lord Reid stated : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions with section 10 of our Act makes it clear that the Indian legislature has substituted " to the extent " for " of which " at the relevant place in section 10 ; and of necessity had to add the words " of it " after " enjoyment " in order to make the whole clause grammatically correct. At page 71 of the report, Lord Reid has pointed out that section 102(2)(d) of the Stamp Duties Act of Australia corresponded with section 11(1) of the United Kingdom Customs and Inland Revenue Act, 1889, and section 43(2)(a) of the United Kingdom Finance Act, 1940. Mr. Sheth, for the accountable person, contended before us that, even if the property covered by the gift can be deemed to pass on the donor's death under section 10 because of the non-exclusion of the benefit to the donor, it must be deemed to pass only to the extent of the benefit and not to the extent of the full value of the property. He contended that the Indian legislature has deliberately departed from similar provisions of the English and Australian statutes by providing that property shall be deemed to pass on the donor's death to the extent of the benefit, possession, etc. We must make it clear that, in the instant case, we a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e attracted to this portion of the condition because the shop is to be allowed to be run on the ground-floor of the premises permanently and thus the interest cannot be said to pass on the death of the deceased. Assuming that we are wrong on that aspect of the interpretation of section 10, it is clear that in the light of the judgment of the Supreme Court in George Da Costa v. Controller of Estate Duty, that the whole of the property, where the shop premises are situated, would be includible in the total value of the estate of the deceased. In George Da Costa's case the Supreme Court has pointed out that the crux of section 10 lies in two parts : (1) the donee must bona fide have assumed possession and enjoyment of the property, which is the subject-matter of the gift, to the exclusion of the donor, immediately upon the gift, and (2) the donee must have retained such possession and enjoyment of the property to the entire exclusion of the donor or of any benefit to him, by contract or otherwise. The Supreme Court took the view that,as a matter of construction, both these conditions are cumulative. Unless each of these conditions is satisfied, the property would be liable to estate d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ters. Even if our interpretation regarding the non-applicability of section 10 to the shop premises mentioned in the gift deed in Kikabhai's favour were not correct, it is clear that, by reason of the condition for maintenance, all the properties included in the gift deed in his favour would be covered by section 10. In our opinion, therefore, all the properties mentioned in each of the five gift deeds would be covered by section 10 and all the properties included in those five gift deeds must be deemed to have passed on the death of the deceased because in the case of all those properties there was non-exclusion of benefit to the donor within the meaning of the second limb of the second part of section 10 of the Act. The result, therefore, is that the value of the immovable properties included under the five gift deeds made by the deceased on September 25, 1951, in favour of his five sons, has to be included in the principal value of the estate of the deceased under the provisions of section 10. We, therefore, answer the question referred to us in the affirmative and as follows : " The sum of Rs. 1,75,000 representing the value of the immovable properties gifted by the dece ..... X X X X Extracts X X X X X X X X Extracts X X X X
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