9911796707
TMI Blog1979 (7) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... nclusive of an annuity of Rs. 1,000 per year for life. The State Bank of India was appointed the executor. On the same day, Mrs. Aley Chandy, his wife, executed a settlement deed, under which she constituted herself and the deceased as trustees and a house in Bangalore owned by her was transferred and conveyed to the trustees to be held by them in accordance with the provisions of that deed. Clause 5 of the settlement deed provided that the trustees should hold the property in trust for Mrs. Aley Chandy for her life, that she should be entitled to possession and enjoyment thereof throughout her lifetime, and that she should be entitled to let out the same or any part of the same and enjoy the rents and profits thereof but only with the writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities and the Appellate Tribunal it is clear that the matter came to be considered only in the light of the provisions of s. 7 of the E.D. Act. Section 7, in so far it is material, runs as follows: " 7(1). Subject to the provisions of this section, property in which the deceased ......... had an interest ceasing on the death of the deceased shall be deemed to pass on the deceased's death to the extent to which a benefit accrues or arises by the cesser of such interest...... " It would be useful at this stage to refer to s. 40, which runs as follows: "40. The value of the benefit accruing or arising from the cesser of an interest ceasing on the death of the deceased shall (a) if the interest extended to the whole income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble in respect of the said property. 6. In the event of Mr. M. C. Chandy surviving Mrs. Aley Chandy, the following provision shall take effect after the lifetime of Mrs. Aley Chandy. Mr. M. C. Chandy, the second beneficiary abovenamed, shall take the said property absolutely. He shall be entitled to take possession of the property and, on his taking possession of the property, this trust shall thereupon terminate and cease and Mr. Chandy shall be the absolute owner of the said property. 7. In the event of Mrs. Aley Chandy surviving Mr. Chandy, then the aforesaid settlement in favour of Mr. Chandy shall not take effect and shall stand cancelled, and the trustee or trustees of this settlement shall, after the death of Mrs. Aley Chandy, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g lease or make an imprudent or uneconomic bargain with reference to the rent or the period, then it is Mr. M. C. Chandy who would suffer by it. In order, therefore, to see that lie did not lose the benefit created under the document by reason of any action of Mrs. Aley Chandy during her lifetime, it was provided that in letting out the property she should take his written consent. Clause 6 contemplates Mr. M. C. Chandy surviving Mrs. Aley Chandy. In that event, he takes the property absolutely. In the present case, it is necessary to look into cl. 7 as he pre-deceased his wife, and cl. 6 could not apply. Clause 7 provides that in the event of Mrs. Aley Chandy surviving Mr. Chandy, the settlement in his favour is not to take effect and will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, he did not have any interest in the property which could be said to have ceased on his death. Section 7 cannot apply. The estate duty assessment has to fail for one More reason. We have earlier pointed out that one of the conditions for the applicability of s. 7 is that the benefit must be capable of being measured as provided in s. 40. It would be seen from that provision that if the interest extended to the whole income of the property, then the value of the benefit would be the principal value of the property. If the interest extended to less than the whole income of the property, then there is to be a proportionate valuation. In the present case, the interest, did not extend to any income from, the property. Therefore it is n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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