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TMI Blog1979 (2) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... ons. It was partly used for accommodating Liberty Rest House. The Asst. CED on these facts held that the deceased Mulji Valji was not entirely excluded from the benefit and enjoyment of the subject-matter of the gift and he, therefore, added Rs. 69,000 to the taxable estate. The accountable person, therefore, carried the matter in appeal before the Appellate Controller before whom it was, inter alia, contended that s. 10 of the E.D. Act, 1953, was not attracted to the case as the subject-matter of the gift was a different property from the one, the partial use of which by the donor attracted s. 10. This contention of the accountable person did not impress the Appellate Controller, who, in view of the definition of the word "property" in s. 2(15) of the E.D. Act held that the property taken under the gift would also include the converted property and, therefore, confirmed the order of the Assistant Controller. In further appeal before the Tribunal, at the instance of the accountable person, it was contended that conversion as stipulated in s. 2(15) of the Act could not cover the conversion made by the donee and, therefore, s. 10 was not attracted on the facts and in the circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he donee must have retained such possession and enjoyment of the property to the entire exclusion of the donor or of any benefit to him, by contract or otherwise ...... The second part of the section has two limbs: the deceased must be entirely excluded, (i) from the property, and (ii) from any benefit by contract or otherwise." (Emphasis supplied by us). The contention of the revenue is that both these conditions are satisfied in the present case, inasmuch as the possession and enjoyment of the house property purchased with the aid of the amount of cash gift was not immediately assumed by the donee and the deceased was not entirely excluded from the enjoyment of the property and from any benefit by contract or otherwise. In so far as the deceased was allowed to reside in the house property in question, it was fairly conceded on behalf of the revenue that the second proviso to s. 10 will take out to that extent the case from the purview of s. 10. An issue was, however, joined on the finding of the Tribunal that the house property in question was not the property taken in gift nor was it referable to the gift. It was urged that the Tribunal committed an error of law in not appre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ins on us that it is only the property which is taken under any gift which can be deemed to pass on the donor's death to the extent its benefit, possession and enjoyment is not taken over by the donee or retained by him to the exclusion of the donor. In that context, therefore, we cannot read or interpret the term "property" as to include the converted property also. The legislative intent as evinced in s. 10 is clearly set out and we have to construe this section literally and grammatically on the recognised principles of interpretation of statute. We have to consider what was the property in question at the time of gift. In other words, what was the subject-matter of the gift itself since it can be only that property which can be taken under the gift. If that interpretation is correct, and we do not feel any doubt in our mind as to the construction of the phrase "property taken under any gift", the answer is obvious that, in the present case, the subject-matter of the gift was the cash amount. It should be recalled that the gift was in the sum of Rs. 69,000 only, whereas the price of the house property purchased by the sons was to the tune of Rs. 1,71,000. It is not clear from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ...." We do not think that this observation supports the case of the revenue for two reasons: in the first place, the entire observation is not taken into consideration by the learned advocate for the revenue, and, in the second place, the question which the Division Bench of the Kerala High Court was called upon to consider was : what is the meaning of the word "accrue" in s. 34(4) of the E.D. Act ? In order to appreciate the opinion of the Division Bench of the Kerala High Court in its proper perspective, we must read the observation relied upon by the learned advocate for the revenue in its context. The opinion reads as under : "In section 34(4) (section 6(5) of the British Finance Act of 1894), the word used is 'accrue'. 'Accrue' means 'to fall (to any one) as a natural growth or increment; to come as an accession or advantage' in the Shorter Oxford English Dictionary ...... It is in the light of this meaning that we have to interpret section 34(4) which will also recognise the principle of the Sneddon case [1954] AC 257; [1954] 25 ITR (ED) 6; 3 EDC 491 (HL). If, in the cash or the property gifted either by way of an out and out gift or by way of a settlement, the donee get ..... X X X X Extracts X X X X X X X X Extracts X X X X
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