9911796707
TMI Blog1975 (12) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... ons as originally referred to us and as reframed by us, a few facts may be stated. The reference relates to property which purportedly passed on the death of Ardeshir Dadabhai Baria (hereinafter referred to as the deceased), who died on 13th August, 1958. He left surviving behind him his widow, Mrs. Monie Baria, and two daughters, Mrs. Piloo Antia and Mrs. Khorshed Billimoria. Mrs. Piloo Antia at the time of death of her father, had two children, one son, Minoo, and one daughter, Laila. On 23rd October, 1930, the deceased handed over to certain trustees the sum of Rs. 3,60,000 for the benefit of his wife, Monie, and an indenture of trust in respect of the said amount was executed between the settlor and the said trustees on 7th November, 1931. A copy of this trust deed is to be found annexed to the statement of case as annexure " A ". Similarly, on 31st December, 1930, the deceased set apart a sum of Rs. 2,00,000 for the benefit of his daughter, Piloo (called Pirozbai in the formal deed of trust) and in respect of the said amount a trust deed was made and executed by and between the settlor and the trustees on 31st January, 1932. A copy of the said trust deed is annexed as annexu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me point of time later on to the execution of the respective trust deeds (not specified in the statement of case or in the consolidated order of the Tribunal) the trust funds were deposited by the trustees with the deceased and the deceased was paying interest to the trustees in respect of such deposits. Originally, the rate of interest was 9% but was subsequently reduced to 7 1/2%. At the time of death of the deceased, i.e., on 13th August, 1958, the accounts of the respective trusts in the personal books of the deceased showed the following credit balances, viz. : Rs. Account Monie A. Baria Trust 4,63,400 Account Piloo A. Baria Trust 2,00,000 Account Rohinton A. Baria Trust 1,20,117 In addition to these three accounts there were further accounts in the books of the trusts with which we are concerned, which may now be specified. According to paragraph, 8 of the statement of case, Mrs. Monie A. Baria, who was the beneficiary under the trust created by the deed dated 7th November, 1931, received amounts from the trust from time to time, which amounts she deposited in her account with the deceased. This account may be described as the individual account of Monie A. Baria as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he date of death of the deceased. We will have also to consider the amounts withdrawn by her from this account within two years of the date of death of the deceased. According to the Tribunal up to the year 1955, she had received from the trust created for her benefit the aggregate amount of Rs. 2,57,757. It appears to us that the years mentioned, viz., 1946, for Piloo and 1955 for Khorshed represent the years in which they respectively attained their majority, though this fact is not clearly mentioned in the statement of case. During the period from 1955 to 1958 (ending with the date of death of the deceased), Khorshed is stated to have received a further amount of Rs. 32,000 from the trust created in her favour. In 1952 she had received a gift of Rs. 10,000 from her sister, Piloo Antia, and in 1956 she received a gift of Rs. 3,92,000 from her mother, to which I have already referred earlier. It has been already stated that this amount of Rs. 3,92,000 gifted by her mother included the amount of Rs. 67,948 which the mother, Mrs. Monie A. Baria, had given from the amounts which she had received from the trust created for her benefit. At the time of death of the deceased the amount l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had received from the trust created for her benefit. Mrs. Monie A. Baria, the wife of the deceased, who was also one of the executives of the estate, filed a return on 20th April, 1959, claiming the amounts owed by the deceased to the three trusts mentioned earlier, viz., Monie A. Baria Trust, Piloo A. Baria Trust and Rohinton Baria Trust as deductions under section 44 of the Estate Duty Act, 1953 (Act 34 of 1953) (hereinafter referred to as " the said Act "). Subsequently, a revised return was filed on 22nd September, 1961, claiming that the amounts lying to the credit of these three trusts in the books of the deceased were not debts at all and that they were really trust moneys which had to be excluded from the chargeable estate under section 22 of the said Act. It was also claimed that the amounts lying to the credit of the individual accounts in the individual names of Mrs. Monie A. Baria, Mrs. Piloo Antia, Mrs. Khorshed Billimoria, Laila and Minoo Antia did not represent property derived from the deceased within the definition of section 16(2)(a) of the said Act. It was further contended that the amounts lying to the credit of these accounts were held by the deceased in a fidu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rectification order has been annexed to the statement of case as annexure " D ". The accountable persons thereafter applied to the Appellate Controller of Estate Duty and raised before him similar contentions as had been advanced before the Deputy Controller. The Appellate Controller, however, confirmed the orders of the Deputy Controller on substantially the same grounds as had been given by the Deputy Controller. A copy of the consolidated order of the Appellate Controller in the case of all the accountable persons has been annexed to the statement of case as annexure " E ". The accountable persons thereafter appealed to the Tribunal and it was contended on their behalf that the amounts lying to the credit of the accounts of the trusts with the deceased were not debts pure and simple but were trust moneys lying with the deceased in his capacity as a trustee and they were, therefore, not includible in his estate under the provisions of section 22 of the said Act. It was also, contended that the amounts lying to the credit of the individual accounts of Mrs. Monie A. Baria, Mrs. Piloo Antia, Mrs. Khorshed Billimoria, Miss Laila Antia and Master Minoo Antia, whether at the time o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty held under the trust was not assumed by the beneficiaries to the entire exclusion of the deceased. On behalf of the accountable persons it was pointed out that this aspect was not considered by the authorities below and would give rise to mixed questions of fact and law. The Tribunal, disposed of all the appeals by its consolidated order dated 30th April, 1964, as subsequently rectified by its order dated 23rd April, 1965. According to the Tribunal, the first three amounts out of the several amounts enumerated earlier, i.e., the amounts to the credit of the three trusts could not be properly regarded or held to be debts for the purposes of section 44 or section 46 of the said Act and the position of the deceased with respect to these amounts was that of a trustee holding trust property and he could not be considered to be a debtor of the beneficiaries. However, the Tribunal went on to hold that, though the possession and enjoyment of the property was bona fide assumed by the beneficiaries or by the trustees under the three trust deeds on their behalf, such possession and enjoyment had not been retained by the beneficiaries or the trustees on their behalf to the entire exclusio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12, 1937, even though the estate duty authorities had not considered the applicability of the said section ? 2. If the answer to question No. 1 is in the affirmative, whether the amounts or any portions thereof lying to the credit of the accounts of the trusts created by the deceased by the said three deeds of trust could be included in the chargeable estate under section 22 on the ground that the possession and enjoyment of the trust properties were not retained by the beneficiaries under the trusts to the entire exclusion of the deceased ? 3. Whether, in any event, in so far as Bai Monie's trust was concerned, the amount of Rs. 1.03,400 included in the credit balance of Rs. 4,63,400 in favour of the trust in the books of the deceased could be included in the chargeable estate, even though it did not form part of the original corpus settled by the deceased ? 4. If the answers to questions Nos. 2 and 3 are in the negative, whether, on the facts and in the circumstances of the case, the amounts of Rs. 4,63,400, Rs. 64,817 and Rs. 2,00,000 due from the deceased to Mrs. Monie A. Baria Trust, Rohinton Baria Trust and Mrs. Piloo A. Baria Trust, respectively, were debts liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sums lying to the credit of the said three trusts in view of the fact that the said section was not relied on before the Tribunal or the authorities subordinate thereto ? 5. If the answer to question No. 4 is in the affirmative, whether section 10 of the Estate Duty Act would apply in the case of a disposition made by way of trust without consideration? 6. If section 10 applies to the dispositions made by way of trust without consideration, whether, on the facts and in the circumstances of the case, the sums of Rs. 4,63,400, Rs. 1,20,117 and Rs. 2,00,000 lying to the credit of Monie A. Baria Trust, Rohinton Baria Trust and Piloo A. Baria Trust, respectively, or any portions thereof were includible in the estate as properties deemed to pass on death under section 10 of the Estate Duty Act ? 7. If, on the facts and in the circumstances of the case, the amounts of Rs. 4,63,400, Rs. 1,20,117 and 2,00,000 due from the deceased to the three trusts respectively are held to be debts, were the same or any portions thereof liable to abatement under section 46(1)(a) and/or 46(1)(b) of the Estate Duty Act ? 8. Whether, on the facts and in the circumstances of the case, the amounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as chosen to split up the aggregate amount standing to the credit of Rohinton Baria Trust, viz., Rs. 1,20,117, into two amounts, viz., Rs. 64,817, described as having been contributed by the deceased and Rs. 55,300 described as having been contributed by Mrs. Monie A. Baria. For the purpose of considering whether the amounts standing to the credit of the trust account in the books of the deceased would be properly regarded as held by the deceased on trust or properly regarded as debts due by the deceased to the trustees, it is the entire amount and not the two components thereof which will have to be considered. It is true that after the answer is given and if it is held that the amount represents a debt, consideration may be required to be lavished on the source of the consideration. It is at that juncture only, which would not be necessary if the finding is that the amount is held on trust, that the amount would be required to be split up into two components as done by the Tribunal. According to Mr. Joshi, appearing for the Controller, all these amounts were essentially and truly debts and could not be properly regarded as moneys in the possession of the deceased held by him as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so combined, the legal effect is different from what it would be when the individuals are separate." : (page 254, col. 2).; Observations to the same effect are to be found in the concurrent judgment of Bhashyam Ayyangar J. at pages 258 and 259 of the report. It is important to observe that these observations were made in the context of following trust property where partners of the firm with whom the moneys had been kept had been adjudicated insolvent. Nagappa's case AIR 1931 Mad 251, which is a decision of a Bench of the Madras High Court, was followed in point of time by the decision of the Privy Council in Official Assignee of Madras v. T. Krishnaji Bhat AIR 1933 PC 148 ; 35 Bom LR 756 and it will become necessary to consider this decision in some detail inasmuch as a view has been expressed that Nagappa's case AIR 1931 Mad 251 had been overruled by the Privy Council decision. The question for determination in the appeal before the Privy Council was whether the plaintiff-respondent was entitled to a preferential payment of a sum of Rs. 10,000 from the assets of defendants Nos.1 to 8, vested in the appellant, the official assignee of Madras. The defendants had received the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not affected by the fact that moneys were invested by the firm (one of the trustees) in their own business with the authority of the other trustees. According to the Division Bench of the Madras High Court, the beneficiary was entitled at all times to a charge upon such assets in the hands of the firm. All the aforesaid three decisions came to be considered by a Division Bench of our High Court in Krishnadas Goverdhandas Madivale v. Ratanbai Gokuldas Laxmandas [1940] 42 Bom LR 1044 (Bom). In that case one Krishnadas held a sum of Rs. 11,000 under an oral will of his brother, which amount he was instructed to pay, to his widow, Ratanbai. Ratanbai created a trust of Rs. 10,000 out of this amount, of which she was the main beneficiary and of which Krishnadas was appointed one of the trustees. The trust deed provided that the amount of Rs. 10,000 had been handed over by Krishnadas to Ratanbai and that it was given back to Krishnadas by Ratanbai to be kept as a deposit and was to bear interest. It was further provided that the majority of the trustees, of whom Krishnadas was one, was empowered to invest the trust moneys either in authorised securities or with reputed merchants. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h, the Privy Council held that the trusteeship continued even after the deposit and the Privy Council, according to the Division Bench, did not say that the agreement to pay interest on the amount deposited with a trustee had the effect of engrafting a contract upon it (see page 1055 of the report). In connection with this aspect of the matter we were also referred to a decision of the Supreme Court in Rai Bahadur Seth Tessa Ram Fatechand v. Om Narain Tankha [1967] 37 Comp Cas 204 (SC), where it was observed that the question whether the security deposit in a particular case could be said to be impressed with a trust would have to be decided on the basis of the terms of the agreement between the parties, the facts and circumstances of each case and the subsequent conduct of the parties. If the terms of the agreement, if written, clearly indicate that the deposit was in the nature of a trust, it was held that the court would come to that conclusion in spite of the fact that the payment of interest is provided for in the agreement. The court went on to hold that where there is a clear trust and the trust deed provides that the trustee may use the trust property as he likes, it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the amounts were not segregated and were utilised by the deceased in his own business and for which amounts he paid interest. None of these facts, in my opinion, will alter the nature of the relation between the deceased and the beneficiaries and/or convert his obligation from that of a trustee to that of a mere debtor. The decisions referred to earlier would seem to indicate that a beneficiary would be in a position to follow the trust property even in the hands of a third party who derives the title from the trustee. According to Lewin on Trust (16th edition), at page 655, the trust property could be followed in the hands of even a total stranger who takes it from the trustee with knowledge of the trust. A fortiori it would follow all the more that a beneficiary would be entitled to follow the trust property in the hands of a trustee and that trust property would retain the characteristics of trust property in such hands irrespective of the fact that the trustee is empowered to mix the same with his own funds or utilise the same or is required to pay interest for the same. In my opinion, the conclusion of the Tribunal that the amounts of the three trusts cannot be held to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on later on in connection with those amounts ; but, in my opinion, if it is held that all the necessary facts are on record, it would be open to the Tribunal or even to the High Court in a reference to apply a statutory provision which it considers appropriate to these facts and to give the proper answers to the questions arising for determination by application of the appropriate statutory provisions irrespective of whether such provision was urged before the authorities below. In the same way the Controller relied upon and would be entitled to rely upon the provisions contained in section 10 of the said Act for the purposes of chargeability of the amounts to the credit of the three trusts, although this section does not appear to have been considered by the Tribunal or the authorities subordinate to the Tribunal. The position would be different if further or fresh facts were required to be elicited. That not being the case, I do not see any merit in the objection taken to the applicability of sections 22 and 10 or the latter part of the proviso to section 46(1). Mr. Dastur points out to page 106, line 21, of the paper-book and suggests that both parts of the proviso to section 46 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in Controller of Estate Duty v. H. N. Markandan [1974] 94 ITR 144 (Mad). It was submitted before the Madras High Court that if the provision for exemption under section 22 could not be invoked, the value of the settled properties would necessarily have to be taken to have been included in the estate of deceased. But this submission was not accepted by the Madras High Court. According to the Madras High Court : " The non-availability of exemption under section 22 cannot automatically result in the charge being imposed under section 5. The words 'shall not be deemed to include ' occurring in section 22 cannot be construed as having a positive content so as to include the properties referred to in that section within the charge, wherever the exemption under that section is not available. " The Madras High Court reiterated what had been earlier observed by the Supreme Court that : " The only property that passes on the death of the deceased is the beneficial interest which he was entitled to under the settlement deed. The Madras High Court further observed that section 22 was " a clarifying rather than an excepting provision and it is no objection to its interpretation that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pertaining to such deposits to be found in each of the trusts as there are slight differences of language. It will be important to note whether such differences have any bearing on the question or are what may be called relevant differences. In Monie A. Baria Trust the following provision as regards the investment or deposit with the settlor is found : " And it is hereby declared that the Trustees shall be at liberty to keep the Trust Fund in its present state of investment or at such time or times as they may in their absolute discretion think fit to invest the same by lending the same to or depositing it with the settlor at interest or in the purchase of immovable properties in Bombay of the free- hold tenure only or in the mortgages of immovable properties in Bombay either of the free-hold or of the lease-hold tenure ......" I have already noted the provisions in the said trust conferring on the settlor the right to be the sole managing trustee excluding interference from the others, with full liberty to invest the trust funds, to convert and reinvest the trust funds with specific and absolute power to sell, exchange, transfer, assign any of the properties comprised in the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the partnership agreement and on the understanding that any partner could withdraw and work his land separately. In 1919, Munro and his children entered into a formal partnership agreement, which provided that during the lifetime of Munro no partner should withdraw from the partnership. The question arose, on the death of Munro in 1929, whether the land transferred in 1913 was includible in assessing his estate to death duties under the Stamp Duties Act, 1920-1931 (New South Wales) on the ground that they were gifts dutiable under section 102, sub-section (2)(a) of the Act. It was held that the property comprised in the transfers was the land separated from the rights therein belonging to the partnership, and was, therefore, excluded by the terms of section 102, sub-section (2)(a), from being dutiable because the donees had assumed and retained possession thereof, and any benefit remaining in the donor was referable to the earlier partnership agreement of 1909 and not to the gifts made in 1913. The Privy Council deemed it unnecessary to determine the precise nature of the right of the partnership at the time of transfers in 1913. It could have been, according to the Privy Counci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rding to Mr. Dastur, the trust could have been created by debiting the individual account of the deceased in his own books and in such a contingency it could have been considered as a gift made subject to the right of the deceased to use the moneys, or to use the phraseology which found favour with the Privy Council, shorn of the right to use which was reserved in the deceased at the very time when the disposition was made. Alternatively, according to this branch of the argument, the trust could have contained a specific direction in the trust deed making investment or deposit with the settlor obligatory as the only permissible method of investing or keeping the trust fund. A third method, which it was submitted would also be within the principle laid down in Munro's case [1934] AC 61 2 EDC 462 (PC), was to make it obligatory for the trustees under the dispositions to keep the amounts on deposit or invest with the settlor, viz., the deceased if the deceased so directed the trustees to do. Finally and fourthly, it was submitted that a variant of the third illustration given above can be what was found in the dispositions being considered by us, viz., a provision in the trust deed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med to pass under section 10 of the said Act. As regards both these items, the view of the Supreme Court was that neither can be included in the estate of the deceased. It was observed that on the date when he gifted the house property to the sons, which property was already leased out to the firm, the deceased had two rights therein, viz., of ownership in the property and the right to terminate the tenancy and obtain possession thereof. According to the Supreme Court, the donor had transferred at the time of the gift possession of the property which the nature of that property was capable of on the date of the gift which, in the case being considered by the Supreme Court, was subject to the tenancy. It was held that he had given such possession which the circumstances and the nature of the property would admit and the benefit which he had as a member of the partnership was not a benefit referable in any way to the gift but unconnected therewith. As far as the gift of rupees one lakh was concerned, the Supreme Court approved of the view taken by the Mysore High Court in Controller of Estate Duty v. Aswathanarayana Setty [1969] 72 ITR 29 (Mys). The aspect which was emphasised was th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d follow if the beneficiary took the land directly but burdened with an immediate equitable obligation to grant the lease back to the donor. The principle earlier enunciated by the Privy Council in Munro's case in [1934] AC 61 ; 2 EDC 462 (PC) was held applicable even though the actual signing of the lease took place three weeks after the gift was made. This was since the obligation was held to be contemporaneous with the actual gift. As stated earlier by the Privy Council, it was the substance of one transaction which had to be viewed and not the form. In any case Nichols case [1973] 3 All ER 632 (ChD) does not carry the principle further. There has to be, in my opinion, some condition which is previously existing to, or it may at the highest be contemporaneous with, the gift constituting an independent and binding legal relationship, and in such a case alone can be regarded not of the entire bundle of rights but of the property shorn of some rights. It may be a gift of property subject to a lease or subject to a licence coupled with interest or it may be a gift of an actionable claim to recover a certain amount of money. In such a case the benefit which the donor might have retai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usion of the donor or of any benefit to him for at least two years before the death ;.. ..........." In 1965 a second proviso was added to section 10 by Act 10 of 1965 (with effect from 1st April, 1965) reading as under : " Provided further that a house or part thereof taken under any gift made to the spouse, son, daughter, brother or sister, shall not be deemed to pass on the donor's death by reason only of the residence therein of the donor except where a right of residence therein is reserved or secured directly or indirectly to the donor under the relevant disposition or under any collateral disposition." It may be mentioned that section 12 specifically deals with settlements made by deed or any other non-testamentary instrument containing certain reservations as indicated in sub-section (1) and it is declared that such property shall be deemed to pass on the settlor's death. Reference may also be made to section 16 where in sub-section (2)(b) an inclusive disposition has been defined for the purposes of that section as including any trust, covenant, agreement or arrangement. This provision also may be fully set out : " 16. Annuity or other interest purchased or Pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in concert or by arrangement with any other person,otherwise than for full consideration in money or money's worth paid to the deceased for his own use or benefit, or (b) a disposition by any other person operating to reduce the value of the property of the deceased ; then, in considering whether estate duty should be charged the said first-mentioned disposition shall be left out of account as if this provision did not apply in relation to it ; (b) 'disposition' includes any trust, covenant, agreement or arrangement; and (c) ' subject-matter ' includes, in relation to any disposition, any annual or periodical payment made or payable under or by virtue of the disposition. (3) For the purposes of section 34 the deceased shall be deemed to have had an interest in any property included by virtue of this section in the property passing on the death of the deceased. " Part III of the said Act bears the chapter heading " Exceptions from the charge of duty ", and we are concerned with section 27 as it stood on the relevant date. Sub-section (1) of section 27 which may be fully set out read as under : " 27. Dispositions in favour of relatives---(1) Any disposition made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r byway of transfer, delivery, declaration of trust or otherwise, which shall not have been bona fide made twelve months before the death of the deceased. (b) any property which a person dying on or after such day having been absolutely entitled thereto, has voluntarily caused or may voluntarily cause to be transferred to or vested in himself and any other person jointly whether by disposition or otherwise, so that the beneficial interest therein or in some part thereof passes or accrues by survivorship on his death to such other person ........ " By section 11 of the Act of 1889 sub-section (2) of section 38 of the Customs and Inland Revenue Act, 1881, was amended by, inter alia, providing : " The description of property marked (a) shall be read as if the word 'twelve' were substituted for the word 'three' therein, and the said description of property shall include property taken under any gift, whenever made, of which property bona fide possession and enjoyment shall not have been assumed by the donee immediately upon the gift and thenceforward retained, to the entire exclusion of the donor, or of any benefit to him by contract or otherwise." Thus, after the amendment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of assessment and payment of death duty ...... the estate of a deceased person shall be deemed to include and consist of the following, classes of property : ...... (d) Any property comprised in a ny gift made by the deceased at any time, whether before or after the passing of this Act, of which bona fide possession and enjoyment has not been assumed by the donee immediately upon the gift and, thenceforth retained to the entire exclusion of the deceased, or of any benefit to him of whatsoever kind or in any way whatsoever " (Underlining supplied). The underlined words in section 102(2)(d) indicate a provision materially different from the language employed in section 10 of our Act. What is important for our purposes, however, is that by the defining section, viz., section 100, which is applicable to the entire part, it is clear that a gift sought to be made includible by section 102 would clearly include disposition of property without full consideration in money or money's worth through the creation of any trust. The question which we have to consider is whether the provision under our enactment as it stood at the relevant time is the same or substantially simila ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld the property for the absolute use and benefit of the two sons in equal shares during their respective lives and upon the death of any or both to be held for the use of the wife or wives of such son or sons with remainder to the male children of the two sons in equal shares per stirpes. It is clear from a perusal of the judgment which deals exhaustively with section 10 that the point which was canvassed before us by Mr. Dastur that section 10 was not applicable to such dispositions was not canvassed before the Division Bench of the Calcutta High Court. I, therefore, cannot accept this decision as an authority supporting the proposition that section 10 was applicable to such dispositions. The point came up for consideration before a Division Bench of the Bombay High Court in Katizabai Mohomed Ibrahim v. Controller of Estate Duty [1959] 37 ITR (ED) 53 (Bom), where the provisions of the said Act were set out and exhaustively dealt with. Separate but concurring judgments have been given by the two judges constituting the said Division Bench. One of the arguments which was a link in a chain of arguments which was urged was that the word " gift " to be found in section 10 must be cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to pass under section 10 must be restricted to gifts inter vivos and would not cover cases of properties taken under declaration of trust or settlement. Our attention was drawn by Mr. Joshi to Halsbury's Laws of England, volume 18, paragraph 693, at page 365, where it is observed as follows : " Modes of making gifts.---There are three modes by which a gift inter vivos can be made, namely :---(1) by deed or other instrument in writing ; (2) by delivery in cases where the subject of the gift admits of delivery; and (3) by declaration of trust, which is the equitable equivalent of a gift." With this statement from Halsbury or the observations from the judgement of K. T. Desai J. in Khatizabai's case [1959] 37 ITR (ED) 53 (Bom) viewed as general propositions, there can be no quarrel. However, the question which we have to consider is not the manner or mode of making gift in general but as used in section 10 and in that connection the disparity in the language of the two sections, viz., sections 9 and 10, becomes material. Section 9 talks of property taken " under a disposition made by the deceased " whereas section 10 mentions " property taken under any gift ". Indeed, the change i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 22 will be covered in the proviso to section 10 (originally the only proviso and at present the first proviso to that section). If section 10 was given the construction sought for by Mr. Joshi, then it is the proviso which will carve out the exception or exclusion and section 22 would still remain redundant. It was pointed out by Mr. Joshi that the second proviso to section 10 and the proviso to section 22 had been added to the original provisions of the Estate Duty Act, 1953, by the same amending Act of 1965 (Finance Act of 1965). That might be so ; but that fact, in my opinion, can have little bearing on the interpretation of section 10. It was suggested by Mr. Dastur that section 22 perhaps was originally enacted to carve out an exception from the anticipated effect of the charging provision, viz., section 5. The bare words of section 5 (apart from the later judicial interpretation to the contrary) are such that they would seem to apply to a case where on the death of a trustee or a sole trustee, the property would vest in the new trustees or pass to the legal representatives of the sole trustee. In such a case although it was merely the legal title (de-hors the benef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntroller of Estate Duty [1967] 63 ITR 497 (SC), it was observed that " the crux of section 10 of the Estate Duty Act, 1953, lies in two parts : (1) the donee must bona fide have assumed possession and enjoyment of the property, which is the subject-matter of the gift, to the exclusion of the donor, immediately upon the gift; and (2) the 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. As a matter of construction we are of opinion that both these conditions are cumulative. Unless each of these conditions is satisfied, the property would be liable to estate duty under section 10 of the Act ". Ramaswami J., speaking for the Supreme Court, went on to say : " 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. It was argued for the appellant that the expression 'by contract or otherwise' should be construed ejusdem generis and reference was made to the decision of Hamilton J. in Attorney-General v. Seccombe [1911] 2 KB 688 ; 1 EDC 589 (KB). On this aspect of the case, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... donor must have been entirely excluded from possession and enjoyment of the property (see page 501 of the report). It. was pointed out that there was no such exclusion in the case as the deceased continued to stay in the house till his death as the head of the family and was looking after, the affairs of the household. It was accordingly contended that the first limb of the second part was not satisfied and the property-must be held to pass on the death of the deceased. What may be emphasised is that the deceased was living in the gifted house on account of filial affection and, according to the Supreme Court, the first limb of the section may be infringed if the donor occupies or enjoys the property or its income, even though he has no right to do so which he could legally enforce against the donees. The Supreme Court cited with approval in that connection a passage from the leading Privy Council case of Clifford John Chick v. Commissioner of Stamp Duties [1959] 37 ITR (ED) 89 (PC). Section 10 was again required to be considered and applied by the Supreme Court in Ramachandra Gounder's case [1973] 88 ITR 448 (SC) to which I have already referred earlier in this judgment. In Rama ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the transaction resulting in the gift. To put it differently, the assessee's contention was that the benefit by contract or otherwise must be referable to the property gifted because all the earlier conditions stipulated in the section referred to the property gifted. As the provision for annual payments to the deceased and maintenance of the deceased made in the deeds was not charged on the properties settled, it was held that the deceased could not have retained any interest in the properties settled and, therefore, " it could not be said that he retained any benefit either in the properties settled or in respect of their possession ". As it is not the contention of Mr. Joshi that the facts of this case would fall, within the second limb of the second part, I think it unnecessary to discuss Kanakasabai's case [1973] 89 ITR 251 (SC) in any further detail. The fourth and the last case of the Supreme Court to which our attention was drawn at the bar is Controller of Estate Duty v. Smt. Parvati Ammal [1974] 97 ITR 621 (SC). This decision approves of the decision of the Calcutta High Court in Rash Mohan Chatterjee v. Controller of Estate Duty [1964] 52 ITR (ED) 1 (Cal), to whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he property. (5) The question whether the partnership agreement was 'related' or 'referable' to the gift did not arise ; the question is relevant only to the second limb of the clause." In this connection, before referring to other authorities it is important to bear in mind that we have examined the subject-matter of the disposition and, in my opinion, it was a disposition of the amounts and not amounts shorn of any right as was contended by Mr. Dastur. It is in the light of this finding and the principle enunciated by the Supreme Court in construing section I0 that the question will have lo be further considered. It may be mentioned that according to the Tribunal (see paragraph 13 of the consolidated order), possession and enjoyment of the properties was bona fide assumed by the beneficiaries or by the trustees on their behalf, but possession and enjoyment was not thereafter retained by the beneficiaries or the trustees on their behalf to the entire exclusion of the deceased or of any benefit to him. As indicated earlier, Mr. Joshi has not rested his case on the second limb of the second part, i.e., the retention of benefit. According to him, however, the facts would be cov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 102, sub-section (2)(d) of the New South Wales Stamp Duties Act, 1920 (earlier indicated in this judgment). It was held that the settlement, being a disposition of property effected by the creation of a trust without full consideration in money or money's worth, was a " gift " within the meaning of section 100 of the Stamp Duties Act. It was held further that the property comprised in the gift was the equitable interest in the shares and that bona fide possession and enjoyment of the property comprised in the gift was assumed by the son, the donee, immediately, upon the gift and thenceforth retained to the entire exclusion of the deceased or of any benefit to him of whatsoever kind or in any way whatsoever and accordingly the shares did not form part of the settlor's dutiable estate. The following observations which are to be found at page 440 (2 EDC 788, 803 (PC)) of the report were strongly relied upon by Mr. Dastur : Did the donee assume bona fide possession and enjoyment immediately upon the gift ? The linking of possession with enjoyment as a composite object which has to be assumed by the donee indicates that the possession and enjoyment contemplated is beneficial possessio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with the donees (either the beneficiaries or the trustees and the beneficiaries) and that because subsequently the amounts came to be reinvested with the deceased it could not be said that the deceased was in beneficial enjoyment of the amounts. Now, it appears to me that it is not proper to read the words " beneficial possession and enjoyment " as equivalent to the words " possession and enjoyment of a beneficiary or cestui que trust ". It is true that the deceased never obtained possession as a beneficiary in the sense known to the law of trusts. But from this it would not necessarily follow that the deceased did not have beneficial possession and enjoyment of the amounts when they were re-deposited with him, mixed up with his other moneys and utilised by him in his business. One way of looking at the question would be to omit reference to the trusts altogether and to consider what the position in law would be if there had been an outright gift and subsequently the donees had kept the amounts on deposit with the donor, allowed the donor to use the amounts in any way he liked, even permitting the donor to mix up the same with his own moneys and for which use the donor was r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hildren as tenants-in-common in equal shares. The deed gave him wide powers of management and, in particular, provided that in addition to reimbursing to himself all expenses he was entitled to remuneration for all work done by him in managing the trust property on which he resided with his family in his capacity as trustee and manager in the same manner and as fully in all respects as if he were not a trustee thereof. The testator continued to manage the trust property until his death. On his death in 1947 the question arose whether the value of the whole of the trust property or only one-fifth thereof was to be included in his estate for the purposes of death duty under section 102(2)(d) of the New South Wales Stamp Duties Act, 1920-40. It was held, first, it is not sufficient to bring a case within the scope of the section to take the situation as a whole and to find that the settlor had continued to enjoy substantial advantages which have some relation to the settled property, and that it was necessary to consider the nature and source of each of those advantages and determine whether or not it was a benefit of such a kind as to come within the scope of the section. As far as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he only holds the property in a fiduciary capacity and deals with it in accordance with his fiduciary duty." The question is whether in the case before us the deceased can be said, to be holding the properties in a fiduciary capacity and dealing with them only in accordance with his fiduciary duty. The moment it is held and there is a clear finding that the deceased had mixed up the amounts with his own fund and utilised the same as he liked for the purposes of his money-lending business and for the purchase of securities and lands as has been found by the Tribunal, it cannot be said that the deceased was in possession thereof and was dealing with them in accordance with his fiduciary duty. It may be pointed out, though in our case the facts have not been such as falling within the second limb of the second part of section 10, that the observations to be found at pages 16 and 17 of the above report that a benefit to the donor can be regarded as one only if it was at the expense of the donee and if it impaired or diminished the value of the gift, have been subsequently doubted in Clifford John Chick v. Commissioner of Stamp Duties [1959] 37 ITR (ED) 89, 100 (PC). The next case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Their Lordships of the Privy Council found that on the facts of the case before them both limbs of the second part of the section would be attracted though, as far as the second limb was concerned, according to them, any question whether the benefit taken by the donor impairing the possession and enjoyment by the donee of the subject-matter of the gift did not arise, it being held that the daughter's possession and enjoyment stood reduced and impaired precisely by the measure of the testator's use and enjoyment of her income (at page 45 of the report). In my view, this decision would be a complete answer to the submission which Mr. Dastur has been making before us. It was the case of a trust which the Privy Council was considering and the beneficial interest in that trust remained at all times with the daughter and the corpus remained at all times with the trustee-company. By reason of the arrangement, however, which has been indicated earlier, the donor obtained the advantage of using the moneys of the daughter and thereby, according to the Privy Council, reduced her enjoyment of, what was her trust income. On these findings the case appears to have been brought within both th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t : that the capital of the business should consist of the livestock and plant then owned by the respective partners; that the business should be conducted on the respective holdings of the partners and such holdings should be used for the purposes of partnership only; that all lands held by any of the partners at the date of the agreement should remain the sole property of such partner and should not on any consideration be taken into account as or deemed to be an asset of the partnership. It was further provided that any such partner should have the sole and free right to deal with his property as he might think fit. Each of the three partners owned a property, that of the donee son being that which had been given to him by his father in 1934, and each partner also brought into the partnership livestock and plant, and their three properties were thenceforth used for the depasturing of the partnership stock. This state of affairs continued up to the death of the father in 1952. On these facts it was held that the value of the property given to the son in 1934 was to be included in computing the value of the father's estate for the purposes of death duty. It could not be disputed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case that the donees had not retained possession and enjoyment of the gifted property to the entire exclusion of the donor, although the possession which the donor subsequently obtained was possession as a lessee and there was no question of his not having paid the rent or full rent. It was held that such a lease would impair the retention by the donee of full possession and enjoyment of the gifted property. The case appears to have been decided on an application of the first limb of the second part of section 10, and in my view it is that limb of section 10 which will govern the facts of the case before us although the gift is not a gift simpliciter but through the medium of a trust. The possession of the donor, it appears, need not necessarily be the possession and enjoyment of the donees and could be possession and enjoyment of a totally different type or in a totally different capacity. From this it would not necessarily follow that the entire amounts lying to the credit of the three trusts, viz., Rs. 4,63,400 for Monie A. Baria Trust and Rs. 1,20,117 for Rohinton A. Baria Trust, would be includible in the estate as properties deemed to pass on death by reason of the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred to a Full Bench decision of the Delhi High Court in Controller of Estate Duty V. Prahlad Rai [1972] 83 ITR 321, 334 (Delhi) [FB]. The Full Bench of the Delhi High Court was considering the question of includibility in the estate of an amount of Rs. 25,000 which was the corpus of the gift made by the deceased, person and the sum of Rs. 10,824 credited as interest thereon. The provisions of section 10 were held applicable to the corpus but not to the interest on the footing that what had been gifted by the deceased was the sum of Rs. 25,000 and the further right to earn interest on that amount did not form part of the property gifted and, therefore, could not be deemed to be property passing on the death of the deceased. It was observed as follows : " In the present case what was gifted by the deceased was a sum of Rs. 25,000. The further right to earn interest on that amount was never gifted by the deceased ......... Accretion to the gifted property which, in the present case, has taken the form of interest did not form part of the bundle of rights in the gifted property as it stood at the time the gift was made. Once the possession and enjoyment of the gifted property was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... settlement, the donee gets absolute dominion and he invests the same in any manner he likes, then the profit or the income resulting from such investment will not form part of the estate of the deceased. In such a case, the profit or income cannot be said to have 'accrued'---to have resulted as a natural growth, accession or increment from the property gifted. On the other hand, if the property gifted yields as a natural growth or result, without the intervention of the donee, income or profit, then such income or profit can be said to have 'accrued ', from the property gifted, with the result that the income or profit will also form part of the estate left by the deceased. If the property or cash gifted is converted into another type of property, the property into which the gifted property is converted will be the property gifted, but, in such a case, the income or profit derived from the converted property may not form part of the estate left by the deceased, since the income or profit can very well be said to be the result of the intervention of the donee." If the Gujarat and Delhi High Courts' decisions are applied, it is clear that the amounts standing to the credit of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, therefore, we will be required accordingly to attribute proper meaning to the words " taken under any gift " to be found in section 10 and giving to that expression its proper meaning as a matter of plain language it is clear that the differences or increases noted cannot be brought within the operation of the deeming provisions contained in section 10 of the said Act. The next question which I have to consider is whether the amounts standing to the credit of Monie A. Baria, Piloo, Antia, Khorshed Billimoria, Minoo Antia and Laila Antia were held by the deceased on trust or whether these amounts were debts due by the deceased. Now, it is clear that the credits to the first three individual accounts, viz., Monie A. Baria, Piloo Antia and Khorshed Billimoria, represented the interest on the corpus of the amounts standing to the credit of the respective trusts. If these amounts or any portions thereof are found to be held by the deceased on trust, then even on the basis that section 10 was applicable, the amounts or those portions thereof as are determined to be held on trust would be governed by the legal position which I have just indicated, viz., that this was not property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that all things proper had been done. Any advantage which the person in a fiduciary capacity would derive from his control over the property or moneys of the other person or even from the relationship would have to be handed over to the latter person in respect of whom he had such capacity. This, however, is not the same thing as saying that the property or money of that other person was held by the first named person on trust. Reference may be made in this connection to section 16 of the Indian Contract Act. Now, out of these persons Monie, Piloo and Khorshed form one class and Minoo and Laila another. As far as the first class is concerned, the basis of this distinction is quite clear. As regards the first three, viz., Monie, Piloo and Khorshed, their individual accounts were primarily the result of interest in their respective trust accounts being credited to the individual accounts. This is, however, subject to a slightly different position for Khorshed, which I will clarify immediately. The Tribunal brought to charge in Khorshed's account the aggregate amount of Rs. 2,89,757 under sections 46(1)(a) and 46(2). A further amount of Rs. 10,000 was brought to charge as gift recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oo similarly received amounts from the trust for her benefit and a statement substantially to the same effect is to be found made for Khorshed. It is, however, not very clear that by such statement the Tribunal meant that as a matter of fact the amounts were handed over to the parties concerned and then re-deposited by them with the deceased. A clear statement to this effect as earlier stated was made, in the case of Monie which is significantly not there for Piloo and Khorshed. Mr. Joshi drew our attention to paragraph 14 of the consolidated order of the Tribunal where it is observed, " now it is clear to us that once any moneys from the trust income reached the hands of the beneficiaries, they ceased to be trust moneys and they became moneys belonging to the beneficiaries, who, in their turn, deposited the amounts with the deceased." As a general proposition no fault can be found with this. The question is whether the Tribunal could be said to have given a finding, as they seem to have given in the statement of case, in the case of Monie, that for Piloo and Khorshed also the income from the trust amounts reached their hands and in their turn they consciously deposited the same ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... simple suit by a creditor against a debtor. It is clear, therefore, that the amounts of Rs. 81,078 and Rs. 12,494 as far as Monie is concerned are clearly debts and we will have to consider the applicability of sections 44 and 46 to these amounts. As far as the amounts for Piloo and Khorshed (excluding the gifts) are concerned, if the Tribunal intended to hold that they had not in fact been paid over to the beneficiaries concerned who had expressly re-deposited the same with the deceased then, in my view, these amounts would be held by the deceased on trust and in accordance with the finding already given as far as the accretions to the trust amounts are concerned they would not be hit by the provisions of section 10 of the said Act. In other words, on the footing that they are trust amounts, they would not be includible in the estate of the deceased as property deemed to have passed on his death. On the other hand, if the Tribunal intended to hold that as a matter of fact the income from the trust amounts had been handed over to Piloo and Khorshed respectively who had in fact re-deposited the same with the deceased, or that the deceased had credited the same to these accounts b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning the value of the estate of the deceased for purposes of estate duty. Section 44 itself provides for four types of debts for which no allowances shall be made. It is the agreed position that we are not concerned with any of these four types of debts for which no allowance is to be made. Section 46 provides for abatement of debts in respect of which an allowance can be claimed under section 44 and provides as follows : " 46. Further limitations.---(1) Any allowance which, but for this provision, would be made under section 44 for a debt incurred by the deceased as mentioned in clause (a) of that section, or for an incumbrance created by a disposition made by the deceased as therein mentioned, shall be subject to abatement to an extent proportionate to the value of any of the consideration given therefor which consisted of--- (a) property derived from the deceased ; or (b) consideration not being such property as aforesaid, but given by any person who was at any time entitled to, or amongst whose resources there was at any time included, any property derived from the deceased Provided that if, where the whole or a part of the consideration given consisted of such consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 16. In my opinion, both the submissions are erroneous and cannot be accepted. The provisions of sub-section (2) of section 16 are incorporated for the purpose of section 46 by reason of sub-section (3) of section 46. Sub-section (2) of section 16 contains three steps which are relevant for our purposes and which would include within the ambit of the expression " property derived from the deceased " interest paid on moneys lying to the credit of the trust accounts of the three persons, viz., Monie A. Baria, Piloo Antia and Khorshed Billimoria. Under section 16(2)(a) " property derived from the deceased " means any property which was the subject- matter of a disposition made by the deceased. Under section 16(2)(b) a " disposition " includes any trust and under section 16(2)(c) " subject- matter " includes in relation to any disposition any annual or periodical payment made or payable under or by virtue of the disposition. The combined result of these three clauses of sub-section (2) of section 16 would be that annual or periodical payment made or payable by virtue of a trust made by the deceased, and interest would seem to be clearly regardable as such payment, would be with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this connection the two parts of the proviso to section 46(1) do assume importance. It may now be stated that by reason of the latter part of the proviso the provisions contained in the proviso to sub-section (1) of section 16, which we have earlier set out in extenso, are made applicable mutatis mutandis. It was submitted by Mr. Dastur in the first place that the Tribunal has misread and misapplied the provisions of section 46(1)(b) in considering whether Piloo and Monie in the case of Khorshed, and Monie in the case of both Minoo and Laila, had derived any property from the deceased for these amounts. According to his submissions, even whilst considering the provisions of section 46(1)(b) one is called upon to examine the consideration for the debts and in the three cases before us this consideration only moved from Khorshed, Minoo and Laila and it was irrelevant that before making the deposits with the deceased these amounts had been gifted to the persons concerned by persons who had property derived from the deceased. To put it in other words, according to this submission, section 46(1)(a) would come into the picture where the consideration for the debt is fully from the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... econd part of the proviso to section 46(1) which incorporates mutatis mutandis the proviso to section 16(1). It was submitted by Mr. Dastur that even if this amount may be considered to be property derived from the deceased then, by reason of the proviso to section 16(1) as would apply to section 46, there has to be excluded from the property derived from the deceased such part in respect of which it could be shown that the disposition was not made with reference to or with a view to enabling or facilitating giving of the consideration which resulted in debt. The idea has been expressed by Dymonds' Death Duties (13 th edition) as " under a disposition not made with reference to, or with a view to enabling or facilitating the transaction ". It was submitted that Khorshed attained the age of majority in 1955 and hence was not even in existence when the trusts were created by the deceased for Monie and Piloo, respectively. It could not, therefore, be said that the dispositions in favour of Monie and Piloo made by the deceased could be said to have been made with a view to enabling or facilitating the subsequent gift to Khorshed which enabled her to make the deposit. What would apply t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, in this view of the matter, I am of opinion that Mr. Dastur would be entitled to place reliance upon these statutory provisions even at this stage. It is quite clear that the disposition made by the deceased was not made with reference to or with a view to enabling, or facilitating the subsequent, intermediate deposits., viz., gift to Khorshed and gifts to Laila and Minoo and the final stage, viz., depositing by these persons with the deceased which gave rise to the debts. The Tribunal, in my opinion, did consider and gave to the accountable persons in the case of Khorshed the benefit of the provisions contained in the first part of the proviso to section 46(1). It was also required, in my opinion, to give to these accountable persons the benefit of the second part of this proviso although this case, it is clear, was not urged before the Tribunal in the specific and precise manner in which it was urged in the High Court. There is one further observation which is required to be made. According to the Tribunal's statement of case, there are no particulars whatsoever regarding the amount of Rs. 25,000 being the gift given to Laila Antia other than the gift of rupees one lakh whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rule in Munro's case [1934] AC 61 ; 2 EDC 462 (PC) has, however, no application to case's in which there is a mere power conferred on the donees or trustees to deal with the property in a particular manner. III. Section 10 does not apply to dispositions made without consideration by way of trust, except in the case of trusts falling under section 27 as amended by Act 33 of 1958 as from 1st July, 1960. IV. In considering the first part of section 10, as well as the first limb of the second part of that section, the transaction must be viewed as a whole in order to determine whether bona fide possession and enjoyment of the property in question was immediately assumed by the donee, and thenceforward retained to the entire exclusion of the donor. We must not, however, be taken as having decided that that rule of interpretation is also applicable to the second limb of the second part of section 10 which deals with the question of the exclusion of the donor from any benefit, by contract or otherwise, since that question did not arise before us. V. The possession and enjoyment of the donor which negatives or excludes beneficial possession and enjoyment of the property by the done ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eficiary from a trustee but later on deposited by the beneficiary with the trustee in a separate personal account of the beneficiary maintained by that trust, as well as moneys credited by the trustee to such account with the consent or concurrence of the beneficiary concerned who did not desire to receive actual payment thereof, are not impressed with a trust but, in the event of the death of such trustee, are debts due by the trustee within the terms of section 44 of the Estate Duty Act, which, however, would be subject to abatement under section 46(1)(a) read with section 16(2)(a) and (b) of the Act. X. Interest payable to a beneficiary on the corpus of the trust funds deposited with a deceased trustee will be property derived from the deceased by reason of the provisions contained in section 46(1) and (3) read with sections 16(2)(a), (b) and (c) of the Act. XI. The consideration referred to in section 46(1) is different from the consideration mentioned in section 16(2)(a), in so far as the former relates to consideration for the debt, whereas the latter relates to consideration for the original disposition made by the deceased. XII. We do not decide whether section 46(1)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st, would be includible in the estate of the deceased as properties deemed to pass on death under section 10 of the Estate Duty Act. The balance of Rs. 1,03,400 in the case of Monie A. Baria Trust and Rs. 70,116 in the case of Rohinton Baria Trust would not be includible in the estate as properties deemed to pass on death by reason of section 10 of the said Act. Further since these two latter amounts were part of the amounts held by the deceased on trust and would not be covered by the provisions of section 10, they would not be properties passing on the death of the deceased and as such not chargeable as constituting part of his estate. Q. 7---In the view taken by us that the amounts were held by the deceased on trust, it is unnecessary to decide this question. Q. 8.---The amounts lying to the credit of the individual accounts of Monie A. Baria, Minoo Antia and Laila Antia in the books of the deceased were debts due by the deceased to the respective parties. As regards the amount lying to the credit of Piloo Antia (nee Baria), it would be a debt due by the deceased if the moneys paid by the deceased by way of interest on the trust amount had in fact been received by Piloo and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her credit in her individual account is held to be a debt due by the deceased to her but not otherwise, Rs. 34,067 will be a debt liable to abatement under section 46(1)(a) and Rs. 1,07,001 liable to abatement under section 46(2) of the said Act. If the entire amount in the account of Khorshed (and not only the sum of Rs. 77,947 or any amount received by her as gift from Piloo and Monie) is held to be a debt due by the deceased to her and not otherwise, Rs. 2,89,257 in her account (including the aggregate amount of Rs. 77,947 which represents amounts received by her as gifts from Piloo and Monie and which amount is the subject-matter of question No. 11 answered hereafter) is liable to abatement under section 46(1)(a) of the said Act. Q. 11---In the negative and in favour of the accountable persons. As far as costs are concerned, though it would seem that on a majority of questions the accountable persons have succeeded, we find that the case advanced on behalf of the accountable persons has varied from stage to stage. Further, it has been observed that some of the arguments which were advanced in this court and which have found favour with us were not advanced at all or were no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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