1973 (12) TMI 25 - HC - Income Tax

Deceased's Intent Key in Estate Duty Case; Appeal Certified

Controller Of Estate-Duty, Gujarat I Versus Dilharshankar C. Bhachech

The court held that the deceased was the full owner of the property after his wife's death, and thus, section 29 of the Estate Duty Act did not apply to ... Joint Will Issues Involved:1. Exemption from estate duty under section 29 of the Estate Duty Act, 1953.2. Interpretation of the joint will executed by the deceased and his wife.3. Determination of whether the property is 'settled property' under section 2(19) of the Estate Duty Act.4. Whether the deceased was competent to dispose of the property at the time of his death.5. The applicability of section 29 of the Estate Duty Act to the facts of the case.Detailed Analysis:Issue 1: Exemption from Estate Duty under Section 29 of the Estate Duty Act, 1953The primary question was whether the property in question was exempt from estate duty under section 29 of the Estate Duty Act, 1953. Section 29 provides that if estate duty has already been paid on settled property on the death of one of the parties to a marriage, it shall not be payable again on the death of the other party unless the latter was competent to dispose of such property at the time of their death.Issue 2: Interpretation of the Joint Will Executed by the Deceased and His WifeThe deceased and his wife executed a joint will on 24th December 1950, disposing of their properties, including a bungalow. The will stated that the survivor would become the owner of the property and that the provisions of the will would become effective after the death of the survivor. The Tribunal interpreted this to mean that the deceased had only a life interest in the property, not full ownership.Issue 3: Determination of Whether the Property is 'Settled Property' Under Section 2(19) of the Estate Duty ActThe definition of 'settled property' under section 2(19) of the Act includes property limited to or in trust for any persons by way of succession. The court needed to determine if the property in question was settled property, which would depend on the interpretation of the joint will and whether the deceased had full ownership rights or merely a life interest.Issue 4: Whether the Deceased was Competent to Dispose of the Property at the Time of His DeathThe revenue contended that the deceased became the full owner of the property upon his wife's death and was competent to dispose of it. The accountable person argued that the deceased only had a life interest and thus was not competent to dispose of the property, invoking section 29 for exemption from estate duty.Issue 5: The Applicability of Section 29 of the Estate Duty Act to the Facts of the CaseThe court examined whether the provisions of section 29 applied to this case, considering the interpretation of the will and the nature of the property. The court concluded that the word 'paid' in section 29 should not be narrowly interpreted to mean 'payable,' and that the estate duty had indeed been paid since the date of the settlement on the death of Mahendraba.Conclusion:The court held that the deceased was the full owner of the property after his wife's death, and thus, section 29 of the Estate Duty Act did not apply to exempt the property from estate duty. The court emphasized that the intention of the testators, as expressed in the will, was to make the survivor the full owner of the property. The court answered the reference question in the negative, in favor of the revenue, and certified the case as fit for appeal to the Supreme Court due to its general legal importance and conflicting decisions from different High Courts in India.Judgment:The court concluded that the accountable person was not entitled to the exemption under section 29, and estate duty was payable on the entire property, including the share originally belonging to Mahendraba. The court's decision was based on a detailed interpretation of the joint will and the relevant provisions of the Estate Duty Act. The reference was disposed of with costs awarded to the Controller of Estate Duty, and the case was certified for appeal to the Supreme Court.