Controller of Estate Duty vs D.A. Gandhi. (Accountable Person for The Late Smt. N.A. Gandhi)

Mrs. Sujata V. Manohar J.

This is a reference u/s 64(1) of the Estate Duty Act, 1953. The decreased, at one time, was the owner to the extent of one-third of the following properties :

(a) the property at Bajaj Road, Vile Parle; (b) property at Ghodbunder Road, Vile Parle; (c) property at Mahim.

By release deeds dated March 29, 1957, the deceased released her one third share in the above three properties in favour of her two sons in consideration of their paying to her Rs. 600 per month during her lifetime. For the payment of the said amount, a charge was created on the property situated at Mahim. It is also an admitted position that the property at Bajaj Road, Vile Parle, was made over to the deceased for her residence during her lifetime and up to her death.

The issue relates to the inclusion of the property at Ghodbunder Road, Vile Parle, in the estate of the deceased. The Tribunal has rightly held that, in respect of the Ghodbunder Road property which was released in favour of her two sons in 1957, more than two years prior to the death of the deceased, no charge was created in favour of the deceased. This property was also not in the occupation of the deceased after she executed the deed of release at any time up to her death. Hence, one-third of this property did not pass on the death of the deceased.

The estate duty authorities had held to the contrary on the following reasoning : There was a charge on the Mahim property for payment to the deceased of a monthly maintenance of Rs. 600. Since the income from the Mahim property was only Rs. 311 per month, the estate duty authorities assumed that the balance amount of monthly maintenance might have come from the income of the Ghodbunder Road property. The Tribunal has held that this is conjecture without any basis. We agree with the Tribunal that there was no charge on the property at Ghodbunder Road for the maintenance of the deceased nor did she retain any interest in the property in any manner after the release deed and up to the time of her death. Hence, it (i.e., one-third share in it) does not pass on the death of the deceased.

Mr. Jetley very fairly drew our attention to the case of Controller of Estate Duty Vs. R. Kanakasabai and Others, in which case the Supreme Court said that, in a case where the deceased had, during his lifetime, executed separate deeds settling properties in favour of beneficiaries absolutely and with full power of alienation, without creating any charge on such properties, such properties were not liable to be included in the estate of the deceased passing on his death. The Supreme Court also observed that, where the taxing provision is ambiguous and is reasonably capable of more than one interpretation, that interpretation which is beneficial to the assessee must be adopted.

Accordingly, we answer the following question, viz : "Whether, on the facts and circumstances of the case, one-third share of the deceased, Smt. N. A. Gandhi, in the Ghodbunder Road property passed on the death of the said deceased ?"

in the negative and against the Revenue.

There will be no order as to costs.