Estate duty on cesser of life interest includes full beneficial enjoyment passing on death, not just transfer of legal title.

Estate duty under section 5 of the Estate Duty Act, 1953 was held chargeable where legal title had vested earlier but full beneficial enjoyment and possession shifted only on the death of a life tenant. The phrase "passes on the death" was read in statutory context to include an actual change of hands in the property as a whole, not merely a transfer of legal title. Because the life interest ceased on death and the remaindermen became entitled to full enjoyment, the property was treated as passing on that death. Section 40 reinforced that the value of the benefit on cesser of the life interest formed part of the principal value chargeable to duty.

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Issues: Whether estate duty was chargeable under section 5 of the Estate Duty Act, 1953 on property in which the legal title had vested earlier, but the beneficial enjoyment and possession changed only on the death of the life tenant.

Analysis: The expression "passes on the death" in section 5 was read in the statutory context and in light of the inclusive definition in section 2(16) and the deeming provision in section 3(3). The Court held that the phrase is not confined to devolution of title alone, but covers an actual change of hands in the property as a whole, whether the property passes immediately or by a contingent or substituted limitation. The property in question, though subject to a prior life estate, changed hands on the death of the life tenant when the petitioner and his brothers became entitled to the full beneficial enjoyment of the property. Section 40 also supported the conclusion that the value of the benefit accruing on cesser of the life interest was chargeable on the principal value of the property.

Conclusion: Estate duty was payable, and the petitioner's challenge failed.

Ratio Decidendi: For purposes of estate duty, "property passing on death" includes any actual change of hands in the property on death, not merely the passing of legal title; where a life interest ceases and full beneficial enjoyment accrues to the remainderman, the property is treated as having passed on that death.

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