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TMI Blog1967 (6) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... of account showing the principal value of the estate on the date of the death of the deceased as Rs. 95,550. The Assistant Controller of Estate Duty made various adjustments and arrived at the principal value as Rs. 3,75,376 on which estate duty was levied. Out of the various adjustments made, the only one relevant for the purposes of this reference was the item of Rs. 1,08,591 which was included as a gift in terms of section 9 read with section 27 of the estate Duty Act, which item is the difference between the one-fourth share of the net value of the family properties, because of the difference due to unequal allotment of the shares to the deceased in partition. The deceased, it was stated, was entitled to receive on partition a share of the value of Rs. 2,06,694 : but, in fact, was allotted only a share of Rs. 98,103 the difference being Rs. 1,08,591 which was treated as a gift under section 9 of the Estate Duty Act. An appeal was filed (among other grounds) challenging this inclusion, and the Appellate Controller held that what is required for purposes of section 9 of the Estate Duty Act is a disposition made by the deceased purporting to operate as a gift. Section 3(1)(b) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r-vivos whether by way of transfer, delivery, declaration of trust, settlement upon person in succession, or otherwise, which shall not have been bona fide made two years or more before the death of the deceased shall be deemed to pass on the death : Provided that in the case of gifts made for public charitable purposes the period shall be six months. (2) The provisions of sub-section (1) shall not apply to gifts made in consideration of marriage or which are proved to the satisfaction of the Controller to have been part of the normal expenditure of the deceased, but not exceeding rupees five thousand in the aggregate. 27. Dispositions in favour of relatives. - (1) Any disposition made by the deceased in favour of a relative of his shall be treated for the purposes of section 9 as a gift unless - (a) the disposition was made on the part of the deceased for full consideration in money or moneys worth paid to him for his own use or benefit; or (b) the deceased was concerned in a fiduciary capacity imposed on him otherwise than by a disposition made by him and in such a capacity only; and references to a gift in this Act shall be construed accordingly; Provided that where the disposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tract or otherwise. 7. The words or otherwise in the above section have been construed by Ramaswami J. delivering the judgment of their Lordships, by reference to the Attorney-General v. Seccombe to be ejusdem generis. He observed : In the context of the section the word otherwise should, in our opinion, be construed ejusdem generis and it must be interpreted to mean some kind of legal obligation or some transaction enforceable at law or in equity which, though not in the form of a contract, may confer a benefit on the donor. 8. We have next to consider whether partition of a Hindu joint family property is a transfer. The basic notion of a Hindu joint family property is that it is property which is held jointly by all the coparceners and that till partition, no part or particle of the property can be said to be owned by any one of the coparceners, but by all. What happens at the time of partition when properties are allotted to the coparceners in accordance with or in satisfaction of their respective shares is that the joint enjoyment of the property is transferred into enjoyment in severalty. Each one of the sharers, it may be stated, had an antecedent title to the property and, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtitioned, there was no transfer of assets within the meaning of section 16(3)(a)(iii). In arriving at this conclusion, reliance was placed on the observations of Subba Rao j. (as he then was) in Radhakristnayya v. Sarasamma and of the decision of Punjab High Court in Jagan Nath v. State of Punjab and the Madras High Court in M. K. Stremann v. Commission of Income Tax (which was subsequently confirmed by the Supreme Court in Commissioner of Income Tax v. M. K. Stremann). Recently again, a Bench of the Madras High Court in Commissioner of Gift-tax v. Getti Chettiar considered this question under sections 2(xxiv) and 4(b) of the Gift-tax Act, and came to a similar conclusion, viz., that even under that Act, partition does not involve transfer of property. In that case, it was contended on behalf of the revenue that the Supreme Court has not decided the question whether the process of division by metes and bounds is a transfer or not and that that question was left open. Kailasam J. at page 459 dealing with this argument, observed : It was not necessary for the Supreme Court in the case to decide the question but in the decisions of the Supreme Court cited already it has been clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Grimwade voted for a resolution of a company which had the effect of reducing the value of his shares and increasing the value of the other sharers, who happened to be his sons. Rich J. as well as Latham C.J. and Webb J. were all of the view that a transaction within the meaning of that definition involved two persons, namely, the donor and the donee. If this is the concept of a transaction, then certainly a division by metes and bounds of joint family property can never be said to be a transaction , inasmuch as there is no donor and donee relationship. Secondly, the words his own property in sub-clause (d) are another impediment in the way of construing the process of partition as a transfer. It is pertinent to notice that Kailasam J. in the Madras case also expressed the said views at page 462 : The sharers by acknowledgment and relinquishment become entitled to specific properties. In the process each of the sharers relinquishes his right to the other property excepting that allotted to him in return for the other sharers relinquishing their right to the property allotted to him. A division by metes and bounds of a joint family property is different, in that all sharers have so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly properties, nor is it between two persons, then it cannot be a gift for the purposes of section 9. 16. Nor can it be said to be a disposition in favour of a relative within the meaning of section 27. The word disposition has, no doubt, not been defined under the Estate Duty Act, though in section 9 that word has been used as purporting to operate as an immediate gift by way of transfer, delivery, declaration of trust, settlement upon person in succession or otherwise. If these two sections are read together, disposition of property is by any of the modes stated in section 9. Even otherwise, in its ordinary meaning, disposition in relation to property would mean to alienate or direct the ownership of property by either will, deed or settlement, by which right to property is conveyed. Whether the word disposition is construed in its natural sense or in the technical sense, in the context of sections 9 and 27, it can only connote a transfer or conveyance and does not contemplate the peculiar characteristics involved in the process of allotment of properties on partition in a joint Hindu family. Further, it may be stated that Hindu law permits of unequal partitions and where once pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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