Oral family settlement and bonus share accrual turn on possession, records, and actual allotment, not mere approval.

An oral family settlement may be recognised where the surrounding facts, revenue records and possession show that family members were holding and acknowledging shares in accordance with the arrangement, even in agricultural holdings governed by the U.P.Z.A. & L.R. Act; on those facts, the deceased was treated as having only a one-fourth share. A resolution to issue bonus shares, or administrative approval for their issue, does not by itself create an enforceable right or accrued debt in favour of the proposed allottee; the right accrues only when the shares are actually issued and allotted. On these principles, the estate-duty reference was answered in favour of the assessee.

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Issues: (i) Whether the deceased had only one-fourth share in the agricultural holding so that only that share passed on his death; (ii) whether the right to receive bonus shares had accrued to the deceased before his death and could be included in his estate.

Issue (i): Whether the deceased had only one-fourth share in the agricultural holding so that only that share passed on his death.

Analysis: An oral family settlement is legally permissible. Even where agricultural holdings are governed by the U.P.Z.A. & L.R. Act, members of a family may resolve their disputes by arrangement if the surrounding facts show that the parties were holding and recognising shares in accordance with the settlement. On the facts found, the revenue records and possession supported the conclusion that the deceased had only a one-fourth share.

Conclusion: The finding that only one-fourth share in the agricultural holding passed on death was correct and is upheld in favour of the assessee.

Issue (ii): Whether the right to receive bonus shares had accrued to the deceased before his death and could be included in his estate.

Analysis: A resolution to issue bonus shares or administrative approval for the issue does not by itself create an enforceable debt or vested right in favour of the proposed allottee. Until the shares were actually issued and allotted, no accrued right existed in the deceased's favour.

Conclusion: The bonus shares had not accrued to the deceased before his death and were not includible in his principal estate, in favour of the assessee.

Final Conclusion: Both referred questions were answered against the Department, and the estate-duty reference was decided in favour of the assessee.

Ratio Decidendi: An oral family settlement may be recognised on proof of family arrangement and possession consistent with the arrangement, and a right in bonus shares accrues only on actual issuance and allotment, not on mere resolution or approval.

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