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Issues Involved:
1. Validity and effect of the ante-adoption agreement. 2. Whether the value of property No. 6937 passed either wholly or partly on the death of the deceased. Issue-Wise Detailed Analysis: 1. Validity and Effect of the Ante-Adoption Agreement: The court examined whether the ante-adoption agreement entered into by the deceased with the natural father of the adopted son had any legal effect. The Assistant Controller initially deemed the agreement valid based on the Privy Council decision in Krishnamurthi v. Krishnamurthi, asserting that the deceased had a life interest in the property, which ceased upon her death, making it assessable under Section 7 of the Estate Duty Act. However, the Appellate Controller and the Tribunal disagreed, stating that under Hindu law, the interest of the adopted son relates back to the date of the adoptive father's death, thus rendering the ante-adoption agreement ineffective. The Tribunal referenced the Supreme Court decision in Krishnamurthi v. Dhruvaraj, which upheld the doctrine of relation back, indicating that the adopted son is considered to have been in existence from the date of the adoptive father's death. Therefore, the widow had no rights in the property, and the ante-adoption agreement was deemed ineffective. The Tribunal concluded that the adopted son inherited the property by survivorship, not through the ante-adoption agreement. 2. Whether the Value of Property No. 6937 Passed on the Death of the Deceased: The court analyzed whether the property passed wholly or partly on the death of the deceased, Narasamma. The Assistant Controller included the full value of the property in the estate, asserting that Narasamma had a life interest in it. The Appellate Controller, however, argued that Narasamma had a half-interest in the property due to the Hindu Women's Right to Property Act of 1937 and the Hindu Succession Act, which became an absolute interest upon her death. The Tribunal, relying on the doctrine of relation back, held that the adopted son, Venkataramaiah, was deemed to have been in existence from the date of Venkanna's death, making him the karta of the family. Consequently, Narasamma had no interest in the property, and the ante-adoption agreement had no effect. The Tribunal concluded that the entire estate devolved on the adopted son by survivorship, and there was no cesser of interest liable for duty under Section 7(1) of the Estate Duty Act. Conclusion: The High Court affirmed the Tribunal's findings, holding that the ante-adoption agreement had no effect concerning the impugned property. The court ruled that the entire estate of Venkanna devolved on the adopted son, Venkataramaiah, by virtue of the adoption and the doctrine of relation back. Therefore, there was no cesser of interest assessable under Section 7 of the Estate Duty Act. The court answered the first question in the affirmative, favoring the accountable person, and the second question in the negative, concluding that the property did not pass on the death of Narasamma. No costs were awarded, and the advocate's fee was set at Rs. 250.
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