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TMI Blog1987 (3) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... lifetime of the deceased and his wife. It has been found that the deceased, during his. lifetime, used the said premises No 25, Chorebagan Lane, Calcutta, as his residence. The donee accepted the gift. The Assistant Controller of Estate Duty reopened the assessment of estate duty and an order was passed on reassessment on August 2, 1972. It was held that as the deceased had reserved some benefit for himself in the said immovable properties given in gift by him to his son, the said properties and the possession and enjoyment thereof were not retained by the donee to the entire exclusion of the donor and as such the said gift came within the mischief of section 10 of the Estate Duty Act, 1953, and that the said properties should be deemed to pass on the death of the deceased. It was noted that in the original assessment, the value of the said properties given in gift had not been included in the estate and, therefore, escaped assessment. It was directed that a sum of Rs. 43,344 being the market value of the said five properties be included in the principal value of the estate which was enhanced accordingly. Being aggrieved, the accountable person preferred an appeal against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of gift, a limited charge to the extent of Rs. 50 per month had been created on the said properties. By applying the decisions of Parvati Ammal [1974] 97 ITR 621 (SC) and Rashmohan Chatterjee [1964] 52 ITR (ED) 1, the Tribunal upheld the order of the Appellate Controller and dismissed the appeal of the Revenue. On an application by the Revenue under section 64(3) of the Estate Duty Act, 1953, the Tribunal, as directed, has referred the following questions as questions of law arising out of its order for the opinion of this court: "(1) Whether, on the facts and in the circumstances of the case, and on a proper interpretation of the deed of gift dated twenty-fourth day of March one thousand nine hundred and fifty-nine, the Tribunal was right in law in holding that only a sum of Rs. 9,600 (rupees nine thousand six hundred) being the capitalised value of the charge on the properties gifted by the deceased to the extent of Rs. 50 (rupees fifty) per month will pass on the death of the deceased and it is includible in the estate for the purpose of Estate Duty Act, 1953 ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal misdirected itself in law in holding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase would be deemed to pass on his death and the value of only that portion should be included in the principal value of the estate. (b) George da Costa v. CED [1967] 63 ITR 497 (SC). In this case the deceased made a gift of a house purchased in the joint names of the deceased and his wife out of the funds of the deceased to their sons. It was recorded in the deed that the donees had accepted the gift and had been put in possession. It was found that the deceased continued to reside in the house even after the gift was made and looked after the affairs of the house. On these facts the Supreme Court by applying the decision of the Privy Council in the case of Clifford John Chick v. Commissioner of Stamp Duties [1959] 37 ITR (ED) 89 and the decision of the Australian court in the case of Commissioner of Stamp Duties v. Owens, 88 CLR 67, held that the said property would be deemed to pass on the death of the deceased under section 10 of the Act of 1953 and the entire value of the property was correctly included in the estate of the deceased. (c) Mohammed Bhai v. CED [ 1 968] 69 ITR 770 (AP). In this case, the deceased had made a gift of his business in stationery goods and certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not be said that the donor had retained any interest or benefit in the properties or possession thereof by the donees. None of the properties which were gifted was liable to be included in computing the principal value of the estate. In this case, the Supreme Court did not find it necessary to consider the meaning of the words " to the extent" occurring in section 10 of the Act of 1953. (f) CED v. Smt. Parvati Ammal [1974] 97 ITR 621 (SC). In this case, the deceased by a deed made a gift of a property where he was carrying on business absolutely to his five sons in equal shares. Thereafter, the deceased took the same properties on a lease from the sons and carried on his business therein as before. Subsequently, the deceased executed a sub-lease of the said business including the premises to a third party. On these facts, it was held that the entire value of the property and not merely the value of the right to possession and enjoyment in the hands of the deceased as a lessee, was liable to be included in the principal value of the estate. The Supreme Court noted that the subject-matter of the gift was full ownership in the property without any diminution. The Supreme Court n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion or enjoyment of some benefit in that property by the donor, can be ascribed to the rights subject to which the gift is made or rights shorn of which the property is gifted, then in such case, the subject-matter of the gift would not be deemed to pass on the death of the deceased. The Supreme Court applied the decision of the Privy Council in the case of H. R. Munro v. Commissioner of Stamp Ditties [1934] AC 61. (h) CED v. Godavari Bai [1986] 158 ITR 683 (SC). In this case, the deceased who was a partner in a firm of bankers issued a cheque for Rs. 3 lakhs in favour of the firm against his account in the firm with the object of making a gift of Rs. 1 lakh each to his three minor grandnephews. The account of the deceased was debited with the said amount and, on the same date, three accounts in the name of the minor donees were credited with the sum of Rs. 1 lakh each. The amount continued to stand in the name of the donees till the deceased died. On these facts, the Supreme Court held that the transaction in question amounted to gifts of actionable claim of the value of Rs. 3 lakhs out of the entire right, title and interest of the deceased in the firm. The gift, however, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gift, therefore, was not made without any reservation or qualification. The deed of gift has to be read as a whole and on a proper construction, it would appear that the donee received the said gift subject to the aforesaid reservation or qualification in favour of the donor. The retention of the benefit in the property in favour of the donor is referable to the rights of which the property gifted was shorn of in favour of the donor. The donor in the instant case derived benefit which arose from the very transaction which resulted in the gift. This is not a case where after the donor had made an unqualified and unconditional gift, a subsequent contract or arrangement was entered into by and between the donor and the donee whereby the donor came to obtain benefit from the properties given in gift. By reason of the aforesaid, it appears to us that the principle laid down by the Supreme Court in the cases of R. Kanakasabai [1973] 89 ITR 251, R. V. Viswanathan [1976] 105 ITR 653 and Godavari Bai [1986] 158 ITR 683 will apply in the instant case and the property which would be deemed to pass on the death of the deceased owner would be the subject-matter of the gift, i.e., the propert ..... X X X X Extracts X X X X X X X X Extracts X X X X
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