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TMI Blog1971 (2) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Estate Duty Act, 19 (hereinafter referred to as " the Act "), on August 2, 1960. The Assistant Controller in pursuance of the said notice determined the principal value of the estate of the deceased at Rs. 1,94,218. The accountable persons appealed to the Zonal Appellate Controller of Estate Duty, Delhi. The Appellate Controller partially allowed the appeal by his order dated October 26, 1965. The accountable persons were not satisfied with the relief granted and they took up the matter in second appeal to the Appellate Tribunal. Before the Tribunal, the following three contentions were raised : (i) that at the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment 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 investigation of the materials on the record, or the facts disclosed thereby or from other enquiry or research into facts or law, but was not in fact obtained, the jurisdiction of the Income-tax Officer is not affected." No doubt these observations were made in relation to the provisions of the Income-tax Act, but it makes no difference, as the provisions of section 59 of the Act are analogous to the relevant provision of the Income tax Act. Therefore, there is no merit in the contention of the learned counsel so far as question No. 1 is concerned. With regard to the second question, the argument is rather interesting, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty. 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 the will. Moreover, section 53(5) of the Act clearly provides that the liability to estate duty is both joint and several. If any of the legal representatives was omitted by the department, it has to suffer the consequences. It may not be able to recover the entire estate duty from the legal representative against whom it had omitted to proceed under the Act. Therefore, it is idle to suggest that in view of these provisions, Shrimati Chander Mohni is an accountable person. In our opinion, the Tribunal came to the right conclusion on the second question. The third question does not arise, in view of our decision on the second quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, 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 Explanation 2 is concerned not with that kind of situation, but an extinguishment of a right and creation of a benefit thereby, and this process is statutorily deemed to be a disposition which is in the nature of a transfer. Section 9 itself speaks of a disposition, and such a disposition no doubt should at least operate or purport to operate as an immediate gift inter vivos whether by way of transfer, delivery, declaration of trust, settlement upon the person in succession, or otherwise. But the word ' transfer ' in section 9 cannot be understood in isolation and by confining one's attention only to that section. Its scope has got to be app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x 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 severalty. Each one of the sharer had an antecedent title and, therefore, no conveyance is involved in the process, as a conferment of a new title is not necessary ". The Madras High Court again examined the question in M. K. Stremann v. Commissioneer of Income-tax with reference to section 16(3)(a)(iv). It observed that " obviously no question of transfer of assets can arise when all that happens is separation in status, though the result of such severance in status is that the property hitherto held by the coparcenary is held thereafter by the separated members as tenants-in-common. Subsequent partition between the divided members of the family ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 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 without consideration, which a gift as ordinarily understood in the law of transfer would always be, the legislature proceeded to bring within the charge of estate duty under section 27, sub-section (1), dispositions made for partial consideration provided they were made by the deceased in favour of a relative. The legislature said that a disposition made by the deceased in favour of a relative shall be treated for the purpose of section 9, sub-section (1), as a gift unless it was made for full consideration in money or money's worth, that is, if it was made for partial consideration. Section 9, sub-section (1), and section 27, sub-section (1), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plates 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 is no extinguishment of any ' right ' possessed by a coparcener which results in benefit to another coparcener. It is therefore evident that in the present case there was no extinguishment at the expense of the deceased of any ' right ' within the meaning of the Explanation and the Explanation cannot avail the revenue for the purpose of bringing the case within section 27, sub-section (1)." We have taken the liberty to quote extensively from these decisions because they illustrate the divergent views. After considering the pros and cons of both these decisions and the ratio thereof, we have come to the conclusion with utmost respect to the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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