Deemed disposition in HUF relinquishment can attract estate duty where consideration falls below full share value.

A relinquishment by a Hindu undivided family member of his interest in family business for consideration below the full value of his share may create a deemed disposition in favour of the remaining members. Applying Supreme Court precedent, the court held that the deficiency between the full value of the share and the amount accepted can attract the estate duty provisions on deemed transfers under the Estate Duty Act, and the Tribunal's view that the transaction was merely a partial partition was inconsistent with that interpretation. The addition to the estate was therefore sustained.

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Issues: Whether, on the facts and in the circumstances of the case, the sum of Rs. 1,78,485 was liable to be added to the estate of the deceased under the Estate Duty Act as a deemed disposition arising from relinquishment of rights in the HUF assets and firm business.

Analysis: The deceased had relinquished his interest in the HUF business for a consideration which did not represent the entire value of his share. The legal effect of such a transaction, as explained by the Supreme Court precedent applied by the Court, is that the difference between the full value of the share and the amount accepted may amount to a disposition in favour of the remaining members of the HUF. The Tribunal's view that the transaction was only a partial partition and did not attract the statutory provisions was inconsistent with that binding interpretation of sections 2(15), 9(1) and 27(1) of the Estate Duty Act, 1953.

Conclusion: The question was answered in the negative, against the accountable person and in favour of the Controller, and the addition was held to be sustainable.

Ratio Decidendi: Where a member of a Hindu undivided family parts with his interest in the family assets for less than the full value of his share, the deficiency constitutes a disposition to the remaining members and attracts the estate duty provisions governing deemed transfers.

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