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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 ..... 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 deceased had executed another gift, annexure "B", in respect of the building where he was running a nursing home in favour of his son, Abdul Majeed. Thereafter, the deceased took the building on lease for the purpose of the nursing home agreeing to pay rent of Rs. 75 per month. On April 1, 1960, the deceased entered into a partnership with his son, Dr. K. P. Mohamed Babu, regarding the nursing home and the lease arrangement was transferred to the partnership. The deceased had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. As a matter of construction we are of opinion that both these conditions are cumulative. Unless each of these conditions is satisfied, the property would be liable to estate duty under section 10 of the Act. This view is borne out by the decision of the Court of Appeal in Attorney-General v. Earl Grey, with regard to an analogous provisions under section 38(2) of the Customs and Inland Revenue Act, 1881, as amended by section 11 of the Customs and Inland Revenue Act, 1889. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 Indian statute is a departure from the provisions in the British and Australian Acts. So far as this aspect of the question is, therefore, concerned no assistance can be derived from decisions in other countries. Mr. Balai Pal, learned counsel for the Controller, says that this expression does not indicate any quantum or degree of curtailment of interest. It is merely descriptive of the nature of the property given to the donee. I am not inclined to accept this argument. That is not the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 phraseology of section 10 in the Indian Act would appear to have been substantially borrowed from the English Act, we fail to understand why the Indian legislature introduced those words in the section unless its intention was to bring to tax only that value of property gifted which is still retained by the donor. The section, in case of partial gift, so to state, in the context of section 10, charges only the part covered by the non-exclusion and non-retention clauses in the section. To the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 us now look into the recitals in the deed before us. It is necessary to remember that all the four items in annexure "A" were charged for the maintenance payable to the deceased and his wife. The effect of this provision is that benefit in favour of the deceased is on all the properties comprised therein. The intention of the deceased, therefore, was that a portion of the income of the properties has to be diverted to him and his wife towards maintenance though no doubt to the extent mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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