1989 (3) TMI 47 - HC - Income Tax

Summary

Issues:
- Inclusion of the value of properties covered by a settlement deed in determining the principal value of the estate for estate duty assessment.

Analysis:
The case involved a question of law regarding the inclusion of the value of properties covered by a settlement deed in the calculation of the principal value of the estate for estate duty assessment. The deceased had executed a settlement deed in 1949 in favor of his children, which included provisions for payment to the donor and his wife out of the income of the properties. The settlement deed allowed the donor to proceed against defaulting parties or properties and create a charge on the properties for arrears. The Assistant Controller of Estate Duty initially held that the value of the settled properties should be considered in the estate duty assessment, as possession and enjoyment of the properties by the donees did not exclude the donor.

The Appellate Controller, however, accepted the plea of the assessee, stating that the settlement deed did not create a specific charge. Upon further appeal, the Revenue contended that the settlement deed should fall under Section 10 of the Estate Duty Act, as the donor was not entirely excluded from possession and enjoyment of the properties. The Appellate Tribunal analyzed the clauses of the settlement deed and applied the principle from a previous case to determine that the deceased donor was not completely excluded from possession and enjoyment of the gifted properties.

The High Court, after considering the provisions of the settlement deed, concluded that the gifted properties were not possessed and enjoyed by the donees to the complete exclusion of the donor, as the donor had certain rights and entitlements under the deed. The court affirmed the decision of the Appellate Tribunal, stating that there was no error of law. The court answered the question in the affirmative, favoring the Revenue, and cited a similar decision by the Allahabad High Court in a related case. The judgment was to be forwarded to the Income-tax Appellate Tribunal for further action.