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TMI Blog1971 (12) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... ed dated April 9, 1956, can be deemed to pass on the death of the deceased by virtue of section 10 of the Estate Duty Act, 1953, and if so, to what extent? (2) Whether, on the facts and in the circumstances of the case, the nursing home building gifted by the deceased to his son under the deed dated April 9, 1956, can be deemed to pass on the death of the deceased by virtue of section 10 of the Estate Duty Act, 1953, and if so, to what extent?" The reference relates to the estate duty assessment relating to the estate of Dr. A. K. Kunhalu who died on August 12, 1963. The deceased by the deed of gift dated April 9, 1956, produced as annexure "A", gifted four items of properties jointly to his 5 sons and 3 daughters. Item 1 therein is the residential building over which the deceased had reserved to himself a right of residence. We are concerned in this reference only with items 2 to 4 in annexure "A". The gift provided for payment of Rs. 125 per mensem towards maintenance to the deceased and a like amount to his wife charged on items 1 to 4 therein from the 1st April, 1966. The deceased was a doctor and was conducting a nursing home. On the same day, viz., April 9, 1956, the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not, as from the date of the gift, exclusively retained as aforesaid, if, by means of the surrender of the reserved benefit or otherwise, it is subsequently enjoyed to the entire exclusion of the donor or of any benefit to him for at least two years before the death : Provided further that a house or part thereof taken under any gift made to the spouse, son, daughter, brother or sister, shall not be deemed to pass on the donor's death by reason only of the residence therein of the donor except where a right of residence therein is reserved or secured directly or indirectly to the donor under the relevant disposition or under any collateral disposition." Their Lordships of the Supreme Court in George Da Costa v. Controller of Estate Duty, interpreted section 10 in the following manner: " The crux of the section 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 any benefit to him, by contract or otherwise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mohan Chatterjee v. Controller of Estate Duty. In this case the deceased was the absolute owner of some house properties one of which was house No. 1, Queen's Park, Calcutta. On the 1st of July, 1954, he gifted this property by way of trust for the absolute use and benefit of the two sons in equal shares during their lives and upon the death of one or both the sons to be held for the use of the wife or wives of such son or sons with remainder to the male children of the two sons. The upper portion of the premises at No. 1, Queen's Park, Calcutta, was leased to the deceased himself on a monthly rent of Rs. 150 for five years. Even after the expiry of the lease the deceased continued to occupy that part of the premises until his death on July 11, 1959. The question was whether and to what extent estate duty was chargeable in regard to the premises included in the gift under section 10 of the Estate Duty Act. The learned judges of the Calcutta High Court held that estate duty was payable by the accountable persons only on that portion of the premises which was in the occupation of the deceased as a lessee and observed thus : " The expression 'to the extent' introduced into the Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the extent of the enjoyment which the donor derived by receiving regularly Rs. 200 per month (or Rs. 2,400 per year), deemed to pass to the estate of the deceased. The valae of the gift of the stationery shop is said to be Rs. 2,40,571. Even an income at 6% on the value of the property would amount to Rs. 14,400 per year, but the exclusion is only in respect of the value of that asset which will earn an income of Rs. 2,400 or say of the value of about Rs. 40,000. This is the value of the property which will be deemed to pass to the estate. The facts of the Supreme Court case cannot be a guide in deciding that the whole of the stationery business will pass to the estate, as in that case it was held that the donor was not excluded from possession and benefit of the entire house. We are, therefore, of the view that so much of the value of the stationery business from which the deceased was not excluded will pass to the estate of the deceased." In V. S. Mani v. Controller of Estate Duty, a Bench of the Madras High Court observed : " The words 'to the extent' employed in section 10 are not to be found either in the English or Australian Acts relating to estate duty. Though the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of non-exclusion of the donor from any benefit, under the second limb of the second part of section 10. The gift deeds make it clear that all the properties covered by the relevant gift deeds are subject to this obligation to provide maintenance for the beneficiary concerned, viz., the wife or the unmarried daughter for whom the provision is made in the relevant gift deed and it cannot be predicated in the case of any of the five gift deeds that any particular extent or portion of the property is subject to this obligation for maintenance, the rest of the properties being free from such obligation. Since it cannot be so predicated, it is clear that all the properties covered by each gift deed are subject to the condition for providing maintenance to the person concerned and, therefore, it is clear that in the case of each of the five trust deeds, the donee has not retained possession and enjoyment of the property to the entire exclusion of any benefit to the donor. Since there is non-exclusion of the benefit to the donor with reference to the entire property, it is clear that the words 'to the extent' occurring in section 10 cannot help any of the donees in the instant case". Let ..... X X X X Extracts X X X X X X X X Extracts X X X X
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