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TMI Blog1992 (1) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... sted of the deceased, her husband, Trikamlal, and son Babulal. The husband of the deceased had expired on March 3, 1964, leaving behind him the deceased and the son. The Assistant Controller of Estate Duty held in his assessment order that in view of the provisions of section 6 of the Hindu Succession Act, one-third share of the deceased husband in the Hindu undivided family had devolved by succession on Manigauri and her son equally. Thus, on the demise of her husband, Manigauri had one-half share in the one-third share of her husband in the joint family property, i.e., she had one-sixth share in the whole joint family property. Computing the value of the joint family property for arriving at the principal value of the estate of the deceased Manigauri, the Assistant Controller of Estate Duty included the value of one-sixth share in the 9 items of movable property which, admittedly, at one point of time, belonged to the said Hindu undivided family. The accountable person preferred an appeal against the assessment order before the Appellate Controller of Estate Duty, Gujarat. It was contended before the appellate authority that the deceased Manigauri could not have claimed partition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hindu undivided family, the entire movable property necessarily came to be vested in Manigauri and son Babulal and though there was no subsequent partition between these two persons, they had a defined one-half undivided share in the said movable property, and, therefore, on the death of Manigauri, it was not only one-sixth share but one-half share in the movable property that had passed. Therefore, the assessment order had not worked to the disadvantage of the accountable person when only one-sixth share in the movable property of the Hindu undivided family was included for computing the principal estate of the deceased Manigauri. The Tribunal, therefore, dismissed the appeal of the accountable person. In the above background, the Income-tax Appellate Tribunal has referred to the High Court for its opinion the following two questions at the instance of the accountable person : " (1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that one-half share in the movable property of the Hindu undivided family passed on the death of Smt. Manigauri ? (2) Whether, on the facts and circumstances of the case, the Tribunal was right in l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of Trikamlal in the movable property was, therefore, included by the Assistant Controller in the principal value of the estate of the deceased Trikamlal. That order was confirmed by the Appellate Controller and the matter was carried to the Income-tax Appellate Tribunal, which held that there was no partition and since it could not be predicated of the right of a Hindu coparcener as to what his share in the joint family property would be, Explanation to section 2(15)of the Act was not attracted. The Tribunal, therefore, deleted the inclusion of the value of one-third share of Trikamlal in the movable property of the Hindu undivided family. A reference was then made to the High Court for its opinion on the question whether the Tribunal was justified in holding that the provisions of Explanation 2 to section 2(15) were not attracted in that case with regard to the release by the deceased Trikamlal of his one-third share in the movable properties of the Hindu undivided family. The Division Bench held that it was easily understood that when there is a partition where one of the coparceners receives a lesser share than what was strictly due to him or he relinquishes or releases or di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndivided family at the time of the release. It was, therefore, held that unless it is possible to arrive at the valuation of that right which was being released or disclaimed by the deceased, it is not possible to say that it was property which was being disposed of looking to the provisions of Explanation 2 to section 2(15) of the said Act. The Division Bench, therefore, held in respect of the same release deed, which is under consideration in the present case also, that the release of his right, title and interest in the movable property of the Hindu undivided family by Trikamlal under the registered deed dated January 29, 1964, though amounting to an extinguishment of his right, was not 'disposition of property' under Explanation 2 to section 2(15) of the Act since, at the time of executing the release deed, the property was not partitioned and his share had not become defined. We may now turn to some relevant provisions of the Act for appreciating the question whether release of his undefined share by a coparcener in the joint family property can amount to a disposition or not. Section 5 of the said Act provides for levy of estate duty and, inter alia, lays down that the estat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the person disclaiming never has any right in the property, he has the right to obtain it : this inchoate right is a 'right' for ,the purposes of section 45(2). The ejusdem generis rule does not apply to the words 'a debt or other right' and the word 'right' is a word of the widest import. Moreover, the expression 'at the expense of the deceased' is used in an ordinary and natural manner ; and is apt to cover not only cases where the extinguishment involves a loss to the deceased of a benefit he already enjoyed, but also those where it prevents him from acquiring the benefit ... The extinguishment of a right may also cover the release of his interest by one joint tenant in favour of another." The Supreme Court then held that the following passage in Valliammai Achi v. CED [1969] 73 ITR 806 in the judgment of the Madras High Court expressed the correct view (at page 105) : "The facts of this case, in our opinion, seem to square with the second Explanation to section 2(15). That, no doubt, is an Explanation to the inclusive definition of property. But the language of it seems to go further and coins a deemed disposition in the nature of a transfer. The mechanics of the transfer f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the fictional expansion covers the diminution in the share taken by the coparcener and augmentation of the share taken by the other and impresses the stamp of property on this process by the "deeming" provision. The Supreme Court held that this conclusion was strengthened by the provisions of sections 9 and 27 of the said Act. The Supreme Court also referred to the decision in Grimwade v. Federal Commissioner of Taxation [1949] 73 CLR 199 (Australia), dealing with the expression "disposition of property" in which it was observed that, "where there is an act done by one person with the requisite intent, and as a result there is a transfer of value from any property of that person to the property of another person, the conditions of liability are satisfied." Finally, illustrating its holding, the Supreme Court observed, "If A is entitled to a moiety in property worth rupees five lakhs (or let us assume that much of cash in the till belongs jointly to A and B) and by a partition, relinquishment, disclaimer or otherwise, A accepts something substantially less than his due, say rupees one lakh as against rupees two-and-a-half lakhs and the remainder goes to the benefit of B who get ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conflict with the ratio of the decision of the Supreme Court in CED v. Kantilal Trikamlal [1976] 105 ITR 92. We are of the view that the provisions of section 2(15) read with Explanation 2 of the said Act and of sections 5, 7, 9, 27 and 39 would clearly cover cases of relinquishment of rights by coparceners which is, by virtue of section 27, considered as a gift within the meaning of section 9, if made during the period specified and amounts to a disposition of property which is deemed to pass on death and is, accordingly, exigible to estate duty. The valuation of interest in the property passing on the death of a coparcener by virtue of gifts or dispositions treated as gifts under section 9(1), can also be worked out in the manner provided in section 39. Section 39(1) deals with valuation of interest in coparcenary property ceasing on death and when a gift is made which is a disposition deemed to pass on the death of the deceased under section 9(1), the same criteria for valuation can be applied. There is no warrant for any distinction as is attempted in CED v. Babubhai T. Panchal [1982] 133 ITR 455 (Guj), between Explanation 2 to section 2(15) of the Act and section 39(1) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be the same because the interest of the deceased Trikamlal in the said coparcenary property either was deemed to have passed on the death of Trikamlal under section 9 read with section 27 of the Act since the release deed was made within two years prior to his death or had devolved on these two persons by succession in equal shares in view of the proviso to section 6 read with section 8 of the Hindu Succession Act. Therefore, one-third share in the movable property of Trikamlal was taken in equal shares by Manigauri and Babulal on the death of Trikamlal. Therefore, Manigauri had only one-sixth share in the movable property which came to her on the death of Trikamlal. The property was, admittedly, coparcenary property and no partition had taken place. Therefore, only one-sixth share which came to Manigauri either under the disposition or by succession on the death of her husband was the portion that could pass on her death. The Assistant Controller of Estate Duty and the Appellate Controller were, therefore, right in holding that Manigauri had one-sixth share in the said property that had passed on her death. We, therefore, answer question No. 1 in the negative. As held by the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X
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