TMI Blog1971 (2) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... ession in consequence of which he could have reason to believe that any property chargeable to estate duty had escaped assessment : (2) Whether Smt. Chander Mohni, daughter of the deceased, late Shri Goverdhan Dass, is an accountable person in respect of the property passing on the death of late Shri Goverdhan Dass ? 3. If question No. 2 be decided in the affirmative, whether the notice issued under section 59 of the Estate Duty Act is bad in law ? 4. Whether, unequal partition of the joint Hindu family properties amongst the deceased and his sons have given rise to any disposition made by the deceased in favour of his relatives within the meaning of section 27 of the Estate Duty Act ? " The case relates to the estate of Goverdhan Dass, a leading advocate of Ferozepore City. He died on August 7, 1959. He was survived by two sons, Kul Bhushan, advocate, and his younger brother, Brij Bhushan. He also left a married daughter, Shrimati Chander Mohni. The Assistant Controller, Duty, treated both the sons as accountable persons and assessed them, on June 25, 1960, on the principal value of Rs. 74,361. Later on, the Assistant Controller issued a notice under section 59 of the Esta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, the matter is not res integra and is fully concluded by the decision of the Supreme Court in Commissioner of Income-tax v. A. Raman and Co. The precise argument which prevailed with the High Court in that case was examined by their Lordships at page 16 of the report. It will be, therefore, advisable to reproduce that passage because, in our opinon, it completely concludes the matter : " The High Court in this case was apparently of the view that the information in consequence of which proceedings for reassessment were intended to be started, could have been gathered by the Income-tax Officer in charge of the assessment in the previous years from the disclosures made by the two Hindu undivided families. But that, in our judgment, is wholly irrelevant jurisdiction of the Income-tax Officer to reassess income arises if he has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment. That information must, it is true, have come into the possession of the Income-tax Officer after the previous assessment, but even if the information be such that it could have been obtained during the previous assessment from an invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 59 for the purposes of reassessment, the same is invalid. The crux of the matter is whether Shrimati Chander Mohni is an accountable person. If she is not an accountable person, the argument will fall flat. In our opinion, Shrimati Chander Mohni is not an accountable person. In the first place, she was disinherited by the father. The relevant clause in the will reads thus : " I have already spent a sufficient amount of money for the marriage of my daughter, Chander Mohni, and have instituted a trust worth Rs. 10,000 in her favour. Therefore, she shall not receive any inheritance at my death out of my share of the property. However, after my death, my sons, on my behalf, shall give her five thousand rupees in accordance to her needs. " At best, her position is that of a legatee. (See in this connection section 2(16) read with section 53 of the Act). On a close examination of the will, it will be seen that the entire estate of the deceased passed on to the two sons. The sons have to pay Rs. 5,000 to her and that too in accordance with her needs. No part of the estate came into the hands of Shrimati Chander Mohni on the death of her father. None can come by reason of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cs of the transfer for purposes of Explanation 2 consist in the extinguishment at the expense of the deceased of a right and the accrual of a benefit in the form of the right so given up in favour of the person benefited. Transfer in a normal sense and as understood with reference to the Transfer of Property Act connotes a movement of property or interest or right therein or thereto from one person to another in praesenti. But, in the kind ofdisposition contemplated by the second Explanation, one can hardly trade such a transfer because by the mere fact of extinction of a certain right of the deceased which does not involve a movement, a benefit is created in favour of the person benefited thereby. In the present case the son who was a quondam coparcener had a pre-existing right to every part of the coparcenary property, and if by a partition or a relinquishment on the part of one or more of the coparceners, the joint ownership is severed in favour of severalty, the process, having regard to the peculiar conception of a coparcenary, involves no transfer. That is the view this court expressed in Commissioner of Gift-tax v. Getti Chettiar to which one of us was a party. But Explanati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Subba Rao J., as he then was, delivering the judgment of a Division Bench of the Madras High Court in Gutta Radhakristmayya v. Gutta Sarasamm, pointed out that the latter view was wrong and, expressing his approval of the former view, said : ' Partition, therefore, is really a process in and by which a joint enjoyment is transformed into an enjoyment in severalty. Each one of the sharers had an antecedent title and therefore no conveyance is involved in the process as a conferment of a new title is not necessary.' This observation of the Madras High Court was referred to with approval by the Supreme Court in Commissioner of Income-tax v. Keshavlal Lalluhai Patel where the Supreme Court had occasion to consider whether a partition of joint family property is a transfer in the strict sense. Sikri J., speaking on behalf of the Supreme Court observed: ' We are of the opinion that it is not. This was so held in Gutta Radhakristnayya v. Gutta Sarasamma B. Subba Rao J. (then a judge of the Madras High Court), after examining several authorities, came to the conclusion that " partition is really a process in and by which a joint enjoyment is transformed into an enjoyment in several ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... involves fitting together of words with their context. Words in most cases take their colour from the environment. Barring certain words which are so precise and distinctive as to admit of only one meaning, the majority of words depend on the context and hence the familiar phrase that they must be construed secundum subjectam materiam. We must therefore gather the meaning of the word ' disposition ' having regard to the context in which it is used, and authorities bearing on the construction of that word as used in other statutes cannot help us to arrive at the proper meaning of that word occurring in section 27, sub-section (1). Let us see what is the meaning of the word ' disposition ' in the context in which it occurs in section 27, sub-section (1). Section 9, sub-section (1), provides that property taken under a disposition made by the deceased purporting to operate as an immediate gift inter vivos whether by way of transfer, delivery, declaration of trust, settlement upon persons in succession or otherwise, which shall not have been bona fide made two years or more before the death of the deceased shall be deemed to pass on his death. Having dealt with ' dispositions ' made wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the revenue when the revenue seeks to rely on this Explanation. In the first place, as already pointed out above, partition, even if unequal, does not involve extinguishment of any interest in property at the expense of the coparcener who receives less than what he might have received according to his rightful share. Secondly, the condition which attracts the applicability of this Explanation is that there must be extinguishment of a debt or ' other right '. The words used are ' other right ' as distinguished from ' interest in property ' which we find in the main part of the definition in section 2(15). What the Explanation therefore contemplates is extinguishment of some right of the deceased as a result of which benefit is conferred on another and it does not include extinguishment of an interest in property. Where the legislature wanted to refer to interest in property, the legislature has done so in clear and explicit terms in the main part of section 2(15) and section 7(1) but here the words used are ' other right ' and we cannot therefore regard these words as comprising within their scope and ambit ' interest in property '. It is apparent that in case of partition there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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