Reserved life interest in settled property triggers deemed passing on death and estate duty liability under estate duty law.

Where a settlor executes a settlement and reserves a life interest in the whole property, section 12(1) of the Estate Duty Act, 1953 deems the property to pass on the settlor's death and makes it liable to estate duty. The court rejected the argument that no passing occurred because one interest ended and another began, holding that any later interest arose only under the settlement itself. A separate point on section 7 and valuation was not entertained because it had not been shown to arise from the Tribunal's order. The reference was answered against the assessee.

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Issues: Whether property settled by the deceased, in which she reserved a life interest, was deemed to pass on her death and was therefore liable to estate duty.

Analysis: The settlement deed was executed by the deceased and expressly reserved a life interest in the whole property in her favour. Section 12(1) of the Estate Duty Act, 1953 deems property passing under such a settlement to pass on the settlor's death where an interest for life is reserved to the settlor. The contention that no property passed on death because one interest ended and another began was rejected, since any subsequent interest arose only by virtue of the settlement itself. The attempt to raise a separate issue on section 7 of the Act and valuation was declined because that point was not shown to have been urged before the Tribunal and did not arise from its order.

Conclusion: The property was correctly treated as passing on the death of the deceased under section 12(1) and was exigible to estate duty; the reference was answered against the assessee.

Ratio Decidendi: Where a settlor reserves a life interest in settled property, section 12(1) creates a statutory fiction that the property passes on the settlor's death and is liable to estate duty.

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