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TMI Blog1973 (4) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and in the circumstances of the case, the whole of the trust estate was to be included in the assessment or only a portion thereof and, if so, what portion?" Herein, we are concerned with the estate of Bai Safiabai (the widow of Eusufalli Badri), who died on October 6, 1955. The High Court opined that only one-third of the trust estate of which the deceased was one of the trustees "passed" on her death. The correctness of that conclusion is challenged by the department. According to the department, the entire trust estate "passed" on the death of the deceased. The material facts of the case may now be stated. One Eusufalli Ebrahimji settled upon trust certain immovable properties and leasehold lands by an indenture dated July 15, 1938. Under that deed three trustees were appointed. They were Eusufalli (the settlor), his wife, Bai Safiabai (the deceased) and their eldest son, Mohamedbhai, the accountable person. Under the terms of the trust deed, the settlor was entitled to the net income of the trust properties during his lifetime. After his death, the income of those properties was to be divided into three equal shares ; one-third of the income was to be appropriate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty that "passed" on the death of the deceased. Consequently, the valuation made by the Assistant Controller was enhanced by Rs. 5,73,000. Against the order of the Appellate Controller, the accountable person went up in appeal to the Appellate Tribunal. The Tribunal set aside the order of the Appellate Controller and restored that of the Assistant Controller. It held that only one-third of the trust estate "passed" on the death of the deceased. Thereafter, at the instance of the department, the question set out earlier was submitted to the High Court seeking its opinion thereon. The High Court, as mentioned earlier, answered that question in favour of the assessee. The High Court opined that under section 5 of the Act only the beneficial interest of the deceased in the trust estate "passed" on her death. It rejected the contention of the department that the entire trust estate passed on her death. It further held that the circumstance that the legal title to the estate passed from the trustees to beneficiaries after the death of the deceased was not a material circumstance. Before us it was contended on behalf of the department that the title to the trust properties vested in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition. It does not bring out the meaning of the expression "property passing on the death". The expression "property passing on death" is not a technical expression. In other words, it is not a term of law. The word "passes" means "changes hands". To ascertain whether property has passsed, a comparison must be made between the persons beneficially interested the moment before the death and the persons so interested the moment after the death see the observations of Lord Russell of Killowen in Scott and Coutts and Co. v. Inland Revenue, Commissioners. It is observed in Green's Death Duties, at page 34 : "If, after such a comparison, it appears that the beneficial enjoyment of the property (or a definable part thereof) was, in substance and in events, unaffected by the death, the property (or that part thereof) did not pass on the death merely because, as a matter of terminology, one set of limitations then ceased to have effect and another became operative." It is further observed therein : "...... to the extent that there is no change or beneficial enjoyment de facto, property does not pass merely because the exact nature or extent of the beneficial interests after the deat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the benefit which accrued to the children by the cesser of the annuity, since that was the only property passing on the death of the wife. Dealing with the question of law arising for decision, Kennedy J. observed : "There is no question that, looking to the substance of the disposition which is in question, as to pound 9,600, the children took an interest on the death of the testator which was qua that sum a definite ascertained profit which vested in them, and as to which each of the eight children got his eighth share. Of course the whole estate was subject to the annuity, but the only uncertainty in case of the residue was as regards the amount of anything beyond pound 9,600. It is not until the death of the widow that the residue over pound 9,600 passes to the children and the grand-children in the way provided for by the will. Therefore, if it does not pass until then, it cannot be ascertained until then, for it cannot be known until then that there will be any such residue. Otherwise the matter seems quite clear. The property as regards the pound 9,600 was property which passed on the death of the testator, and not on the death of the testator's widow, and, therefore, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the death of his brother, Manubhai. This contention was rejected both by the High Court and this court. This court held that though the shares were not to be delivered to Manubhai until he attained the age of 25 years, the shares belonged to him since the execution of the trust deed and he was also beneficially entitled to the income from those shares. In the course of his judgment, Shah J. (as he then was), speaking for the court, observed at page 649 : "The interest of Manubhai in the shares and in the accumulated income was 'property' within the meaning of section 2(15). That property did, as we have already pointed out, vest in ownership in Manubhai immediately on the execution of the deed of trust. On Manubhai dying unmarried, the property as to the shares under clause 7 of the deed and as to the accumulated income under the law of inheritance devolved on his brother, Mahendra. On Manubhai's death, there was under the deed of trust a change in the person who was beneficially interested in the shares. This decision clearly lays down that in determining whether a particular property "passed" on the death of a deceased what has to be seen is whether that deceased had any ben ..... X X X X Extracts X X X X X X X X Extracts X X X X
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