Controlled company assets cannot be included under estate duty absent a prior transfer by the deceased to the company.

Section 17 of the Estate Duty Act, 1953 applies only where the deceased has transferred property to a controlled company; the statutory reference to "disposition" does not dispense with that prior transfer requirement. Receipt of remuneration, dividends, perquisites, or delayed payment of amounts due from the company does not itself amount to a transfer of property to the company. Amounts actually due from the company to the deceased remain part of the estate, but that does not permit inclusion of the company's assets under section 17. On that construction, section 17 was not attracted and the issue was answered in favour of the assessee.

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Issues: Whether section 17 of the Estate Duty Act, 1953 could be invoked to include a controlled company's assets in the deceased's estate in the absence of a transfer of property by the deceased to the company.

Analysis: Section 17 operates only when there is a transfer of property by the deceased to a controlled company. The controlled companies rules broaden the meaning of transfer through the concept of disposition, but the statutory scheme still requires a prior transfer. The receipt of remuneration, dividends, perquisites, or other benefits by a managing director from the company, including delayed drawal of amounts lawfully due, does not by itself amount to a transfer of property to the company. Amounts actually due from the company to the deceased remain part of the estate, but they do not justify inclusion of the company's assets under section 17.

Conclusion: Section 17 was not attracted on the facts, and the question was answered in favour of the assessee.

Ratio Decidendi: For section 17 of the Estate Duty Act, 1953 to apply, a transfer of property by the deceased to the controlled company is a necessary pre-condition; mere receipt or delayed receipt of remuneration and benefits from the company does not constitute such a transfer.

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