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TMI Blog2001 (5) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Whether the Appellate Tribunal was correct in holding that the estate duty payable on the value of the estate should not be allowed as a deduction in arriving at the value of the dutiable estate?" At the instance of the Controller of Estate Duty: 'Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the refund of Rs.2,27,681 received by the legal heirs of the deceased consequent on the certificates issued by the Income-tax Officer under section 80K between February, 1971, and May, 1973, did not represent property passing on the death of the deceased and thus was not liable to be included in the dutiable estate?" Shri N. N. Mohan (hereinafter referred to as the deceased) died on July 15, 1969, and an assessment of the estate duty under the provisions of section 58(3) of the Act was made by the Additional Assistant Controller of Estate Duty on April 25, 1975, on Lt. Col. V. R. Mohan (hereinafter referred to as the ("accountable person"). The principal value of the estate was determined at Rs.37,55,504. Aggrieved by this assessment, the accountable person filed an appeal before the Appellate Controller of Estate Duty, who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m income-tax under section 80K of the Income-tax Act, 1961 (in short "the Income-tax Act"). After the death of the deceased, his legal heirs received total refunds amounting to Rs.5,74,308, out of which a sum of Rs.2,27,681 represented the amount of refund which became due on account of relief granted under section 80K of the Income-tax Act and the balance amount of Rs.3,46,627 represented refund of taxes paid by the deceased pursuant to the assessment orders, but became refundable consequent upon the appeals filed by him, being decided in his favour after his death. In the estate duty return of the accountable person, only the amount of Rs.3,46,627 was included and the other amount of Rs.2,27,681 was not included on the ground that it did not represent "property" passing on the death of the deceased. The stand of the accountable person was that at the time of death of the deceased he had right to make a claim for relief under section 80K because in the first instance the claim of the said company under section 80J had to be adjudicated and accepted by the Department and it was only thereafter that the deceased would have become entitled to any relief under section 80K. As there wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fund is deferred, which is not an essential attribute of 'property" under the Act. The support is sought to be derived from a Full Bench decision of this court in Dewan Labh Chand v. CED [1972] 83 ITR 538. In support of the proposition that the scope of the term "property" is very wide and it includes any kind of refund due, learned counsel has cited certain decisions of the Supreme Court but we do not propose to burden the judgment by citing term as there is no dispute on the general principle of law laid therein. On the other hand, Mr. Sharma, while supporting the view taken by the Tribunal has contended that in the present case there was no "property' in existence at the time of death of the deceased because the right to receive refund in question was purely contingent as it was dependent on the action on the part of the company. If the company had failed in its appeals, there was no question of the deceased getting any consequential benefit. In support reliance is placed on the decisions of the Bombay High Court in Estate of Gen. Sir Shankar S. S. J. B. Rana v. CED [1990] 186 ITR 578 and the Kerala High Court in CED v. H. H. Sethu Parvathi Bai [1995] 212 ITR 647. Thus, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 5(1) of the Act, the term "property" shall be deemed to pass even if it is not personally held by the holder before his death provided, he was competent to dispose of the same within the ambit of section 6 of the Act. In M. Ct. Muthiah v. CED [1986] 161 ITR 768 (SC), while dealing with the concept of "property" under the Act, the Supreme Court observed that the insurance money in the case of an accident policy became payable on the happening of a specified contingency. The "property" emerged on the death of the deceased during the subsistence of the policy. Therefore, no "property" can be deemed to pass on the death of the deceased as no 'property" existed at the time of death of the deceased. According to the ratio of the said decision, in order to fall within the expression 'property" as defined in section 2(15) of the Act, the "property" in some form or the other must exist at the time of death of the deceased, which can pass on his death. Clause (16) of section 2 speaks of 'property passing on the death" as including property passing either immediately on the death or after an interval, either certainly or contingently, and either originally or by way of substitutive li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim of the company under section 80J was itself in jeopardy. We, therefore, hold that the refund of Rs.2,27,681 received by the legal heirs of the deceased consequent upon the certificates issued by the Income-tax Officer between February, 1971 and May, 1973, did not represent "property" passing on the death of the deceased and, therefore, it was not liable to be included in the principal value of the estate. The Full Bench decision of this court in Dewan Labh Chand's case [1972] 83 ITR 538, heavily relied upon by learned counsel for the Revenue, does not advance the case of the Revenue. In that case, while answering the question whether the compensation payable to a displaced person under the Displaced Persons (Compensation and Rehabilitation) Act, 1954, was a 'property" within the meaning of the Act, in the affirmative, the court took into consideration three material facts, namely: (i) the displaced persons were holding verified claims, (ii) there was no uncertainty regarding the title of the displaced persons to the compensations, and (iii) it was an indefeasible statutory right conferred on them by the Act of 1954, which is not the case here. As noted above, in the ins ..... X X X X Extracts X X X X X X X X Extracts X X X X
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