TMI Blog1970 (2) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... Meerza (hereinafter referred to as " the deceased ") who died on December 2, 1954. The applicant, Shri Abbas Ali Meerza, is the son of the deceased and an accountable person under the Act. The accountable person submitted a return before the Assistant Controller of Estate Duty, Lucknow, for the purpose of assessment of estate duty under the Act. The Assistant Controller completed the assessment determining the principal value of the dutiable estate at Rs. 2, 11,558. The estate duty payable on the estate was computed at Rs.10,194.75. The accountable person eventually took the assessment to the Central Board of Revenue in second appeal and contended that the following three properties were not liable to be included in the dutiable estate : (i) the house named Afzal Manzil; (ii) the house at Khialiganj; (iii) the house at Golaganj. With regard to the first property, namely, the house named Afzal Manzil, the accountable person contended that it had been gifted by the deceased to his wife, Smt. Umatul Kubra, by means of an oral hiba on the 9th August, 1952, more than two years before his death and, therefore, it was not liable to be included in the principal value of the estate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty continued to belong to the deceased till his death. He further held that even on the assumption that the property had been given to the applicant, it was liable to be included in the estate of the deceased, for the purpose of estate duty, in view of the provisions of section 10 of the Act. The Central Board of Revenue maintained the findings of the Assistant Controller of Estate Duty. At the instance of the accountable person the Board has referred the question, quoted above, for the opinion of this court. Section 5 of the Act is the charging section which authorises the levy of estate duty in the case of every person dying after the commencement of the Act on the 6th October, 1953. Sub-section (1) of section 5 runs as follows : " 5. Levy of estate duty.-(1) In the case of every person dying after the commencement of this Act, there shall, save as hereinafter expressly provided, be levied and paid upon the principal value ascertained as hereinafter provided of all property, settled or not settled, including agricultural land situate in the States specified in the First Schedule to this Act, which passes on the death of such person, a duty called 'estate duty' at the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, attracted in the present case. It may also be mentioned at this stage that the learned counsel for the accountable person did not argue his case in respect of the house at Golaganj and, therefore, we need not return an answer to the question in so far as this property is concerned. We have now to consider the question as regards the first two properties, namely, the property named Afzal Manzil, Lucknow, and the house at Khialiganj, Lucknow. As we have already noted the finding of the Board in regard to these properties is that, although it was gifted by the deceased to his wife on the 9th August, 1952, he continued to reside therein until the date of his death. The Board, therefore, held that the property must be deemed to pass on the death of the deceased, under section 10 of the Act. Learned counsel for the accountable person has relied on two decisions of the Madras High Court in support of his contention that to such a case the provisions of section 10 have no application and the value of the house, "Afzal Manzil", should be excluded from the principal value of the estate of the deceased. The first decision of the Madras High Court is the case of Controller of Estate Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t-matter of the gift and there is no beneficial interest reserved to the donor by contract or otherwise. The Supreme Court pointed out that the crux of the section 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. In the opinion of the Supreme Court both these conditions are cumulative. The Supreme Court remarked that the second part of the section has two limbs: (i) the deceased must be entirely excluded from the property, and (ii) from any benefit by contract or otherwise. Clarifying the position, the Supreme Court said that, as a matter of construction, the words " by contract or otherwise " in the second limb of the section would not control the words " to the entire exclusion of the donor " in the first limb. In other words, in order to attract the section, it is not necessary that the possession of the donor of the gift must be referable to some contractual ..... X X X X Extracts X X X X X X X X Extracts X X X X
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