Beneficial interest in property passing on death can bring house property into the estate for estate duty purposes.

House property in the deceased's peaceful possession, from which rental income was received and which was consistently shown in income-tax and wealth-tax records, was treated as part of the estate for estate duty. The property also stood in the deceased's name in municipal records and was subjected to holding tax, supporting the view that beneficial interest had passed on death. Applying section 2(16) of the Estate Duty Act, 1953, the relevant enquiry was whether a beneficial interest in property passed by reason of death. On those facts, the property was held includible in the deceased's estate and liable to estate duty.

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Issues: Whether the value of the house property was legally includible in the deceased's estate for estate duty purposes.

Analysis: The deceased was found to be in peaceful possession and enjoyment of the property for several years, receiving rental income from it and accounting for it for income-tax and wealth-tax purposes. The property also stood recorded in her name in municipal records and was subjected to holding tax. Under section 2(16) of the Estate Duty Act, 1953, property passing on death includes beneficial interests that change hands by reason of death. The Tribunal's reliance on the principle that the relevant enquiry is whether beneficial interest passes on death was justified on these facts.

Conclusion: The house property was rightly treated as part of the deceased's estate and was liable to estate duty; the finding is against the assessee and in favour of the Revenue.

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