TMI Blog1984 (3) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... Controller stated that there was no basis for the claim of exclusion of Rs. 11,697 and the amount was an asset which passed on death. He, therefore, subjected the same to duty. 2. In appeal, the Appellate Controller referred to a Circular of the Board No. F. 35/1/65-IT(B), dated 5-11-1965 set out in Taxmann's Direct Taxes Circulars, vol. 1, 1980 edition, p. 92, and held that the payment in question was in the nature of ex gratia payment by the employer to the legal representative of the deceased and the leave salary received was not property passing on death. 3. The revenue is aggrieved and the learned departmental representative submitted that all property which was within the disposing capacity of the deceased would be deemed to pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... servations on the expression 'property passing on death' in the judgment of S.T. Desai, J., in the case of Khatizabai Mohomed Ibrahim v. CED [1959] 37 ITR (ED) 53 (Bom.) where it has been observed : " The expression 'property passing on the death' has been defined in section 2(16) which is as under : " 'Property passing on the death' includes property passing either immediately on the death or after any interval, either certainly or contingently, and either originally or by way of substitutive limitation, and 'on the death' includes 'at a period ascertainable only by reference to the death'." It will be noticed that the word 'passing' has not been defined in the Act, and what is the meaning of the word 'passing' is perhaps the only po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and devices that might be adopted to avoid the operation of the imposition has proceeded to lay down a catena of rules headed 'property which is deemed to pass'. This has been done in sections which immediately follow section 5 . ." In Smt. Shantaben Narottamdas v. CED [1978] 111 ITR 365, there are the following observations by the Gujarat High Court : The taxing event is the passing of the property on the death of a person. And the property which passes on the death of a person is the property in respect of which title is transmitted to the heirs and successors of the deceased on account of the death. [We are, for the present, not concerned with the inclusive definition contained in section 2(16) of the Act]. When does transmission of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... praesenti or contingent, in the property (3) The deceased must be in possession and control, be it actual, constructive or beneficial, of the property. (4) The deceased must have power to dispose of such property." We now set out the relevant portion of the circular of the Board referred to : " The leave salary paid to the legal heirs of the deceased employee in respect of privilege leave standing to the credit of such employee at the time of his/her death is not taxable as salary. For being taxable as salary, the payment must be due from an employer to the assessee. If the deceased officer is regarded as the assessee in respect of the proposed payment, then the amount was not due to the assessee. Firstly, this is not a payment whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... timate due. So, if the payment is ex gratia to the legal heirs, certainly it was not an amount due to the deceased. 8. Having come to the conclusion that there was no property of the deceased prior to his death, the question of any property passing on his death, albeit a moment after his death, insofar as leave salary in respect of leave not taken is concerned, did not arise. We may also point out that the Andhra Pradesh High Court in the case of Smt. Lakshmisagar Reddy had stated that it was unable to agree with the Madras High Court view that the mere right to nominate beneficiaries under insurance policy would amount to an interest in property. So also, a mere right to nominate, even if it had existed in the present case, would not bri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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