1961 (4) TMI 133 - HC - Income Tax

Court quashes Estate Duty Officer's notice on adoptive mother's estate. Writ of prohibition issued.

YELUKURU SATYANARAYANA Versus ASSISTANT CONTROLLER OF ESTATE DUTY, KURNOOL.

The court quashed the notice issued by the Estate Duty Officer concerning the estate of the adoptive mother, which had vested in the petitioner as the ... - Issues Involved:1. Jurisdiction of the Estate Duty Officer.2. Applicability of the Estate Duty Act to the estate of the adoptive mother, Lakshmi Devamma.3. Legal interpretation of the Hindu law regarding adoption and property rights.Detailed Analysis:1. Jurisdiction of the Estate Duty Officer:The petitioner sought a writ of prohibition to restrain the Estate Duty Officer, Kurnool, from assessing the estate of Lakshmi Devamma under section 55 of the Estate Duty Act. The petitioner argued that the Estate Duty Officer lacked jurisdiction as the properties had vested in him from the date of his adoptive father's death and were not subject to the Estate Duty Act. The court noted that the existence of an alternative remedy does not bar the maintainability of the petition if there is a prima facie lack of jurisdiction. The court referenced the case of Sri Shirur Mutt v. Commissioner, Hindu Religious Endowments Board, and the Supreme Court's judgment in Calcutta Discount Co. Ltd. v. Income-tax Officer, affirming that writs can be issued to prevent authorities from acting without jurisdiction.2. Applicability of the Estate Duty Act:The Estate Duty Officer issued a notice treating the petitioner as accountable for the estate duty of Lakshmi Devamma, arguing that her adoption of the petitioner constituted a gift under section 10 of the Estate Duty Act. The officer contended that since Lakshmi Devamma enjoyed benefits from the property until her death, the conditions under section 10 were not satisfied, making the estate subject to duty. The petitioner challenged this, asserting that the joint family property had vested in him from his adoptive father's death and that Lakshmi Devamma had no estate or property falling under the Act's purview. The court examined sections 5, 6, and 3 of the Estate Duty Act, which pertain to property passing on death and the competence to dispose of property.3. Legal Interpretation of Hindu Law:The court analyzed the principles of Hindu law regarding adoption and property rights. It was established that upon the valid adoption of the petitioner by Lakshmi Devamma, the property vested in him from the date of his adoptive father's death. The court referenced Mulla's Hindu Law, which states that a widow's adoption of a son divests her of any rights to the property, which then vests in the adopted son. The court concluded that Lakshmi Devamma had no disposing power over the property after the adoption, and it could not be considered her estate for the purposes of the Estate Duty Act. However, any property that belonged to Lakshmi Devamma personally, such as jewellery, could be subject to estate duty.Conclusion:The court quashed the notice issued by the Estate Duty Officer concerning the estate of Ramaiah Chetty, which had vested in the petitioner as the adopted son. The court issued a writ of prohibition restraining the Estate Duty Officer from proceeding with the proposed assessment on this estate. The petition was allowed with costs, and the advocate's fee was set at Rs. 100.