Contingent future interest under a settlement deed did not attract estate duty because no vested interest ever arose.

A contingent future interest under a settlement deed did not attract estate duty where the deceased was entitled to the property only if he survived the life tenant. Because no vested interest ever arose in his favour, nothing ceased on his death for the purposes of section 7 of the Estate Duty Act, 1953. The alleged benefit was also not shown to be capable of valuation in the manner required by section 40, so the charging provision could not apply. The estate duty addition on the Bangalore house was therefore unsustainable.

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Issues: Whether the deceased acquired any interest in the Bangalore house under the settlement deed so as to attract section 7 of the Estate Duty Act, 1953, and whether the benefit on cesser of any such interest was capable of valuation under section 40.

Analysis: The settlement deed gave the wife possession and enjoyment of the property for life, while the deceased's entitlement arose only if he survived her. His consent was required for leasing during her lifetime because the document protected the future interest intended for him. As the deceased predeceased his wife, no present vested interest had come into existence in his favour; his right was merely contingent on survival and never vested. In addition, the alleged interest did not extend to any income from the property, so the statutory measure of valuation under section 40 could not be applied. Where the benefit is not capable of being measured in the manner contemplated by section 40, the charge under section 7 does not arise.

Conclusion: The deceased had only a contingent and unvested interest, which did not cease on his death, and section 7 was not attracted. The question was answered in the negative, against the Revenue.

Final Conclusion: The estate duty addition in respect of the Bangalore house was unsustainable because the deceased never acquired a vested interest in the property and the alleged benefit was not capable of valuation under the charging provision.

Ratio Decidendi: For estate duty under section 7 to apply, the deceased must have had a vested interest in the property which ceased on death, and the resulting benefit must be capable of valuation under section 40; a merely contingent future interest that never vests does not attract the charge.

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