Estate duty exemption under settled property failed where a joint will gave the survivor full ownership and power of disposition.

Section 29 of the Estate Duty Act was construed purposively as an exemption meant to avoid double levy on settled property after duty had been paid since the settlement. A joint will, however, was read as conferring full ownership on the surviving spouse rather than a bare life interest, because the language showed an intention that the survivor become the owner and enjoy power of disposition. The grandsons' interests were postponed until the survivor's death, and no clear agreement not to revoke the will was proved. As the survivor was competent to dispose of the property, it was not settled property under section 2(19) and the estate duty exemption failed.

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Issues: (i) Whether section 29 of the Estate Duty Act, 1953 applied on the facts so as to exempt the deceased spouse's half share from estate duty. (ii) Whether the joint will created only a limited life interest in the survivor, or conferred full ownership with power of disposition, so that the property could not be treated as settled property within section 2(19) of the Act.

Issue (i): Whether section 29 of the Estate Duty Act, 1953 applied on the facts so as to exempt the deceased spouse's half share from estate duty.

Analysis: The exemption under section 29 was construed in light of its object of preventing double levy on settled property after duty had already been paid on the death of one spouse. The Court held that the phrase relating to duty having been paid "since the date of the settlement" was not to be read narrowly so as to exclude a case where the settlement and the liability to duty arose together, and the word "paid" could not be reduced to "payable" in a way that would defeat the statutory purpose. On the facts, duty had in substance been paid after the settlement came into existence.

Conclusion: Section 29 was capable of application in principle, but exemption ultimately depended on whether the property was in truth settled property and whether the deceased had been competent to dispose of it.

Issue (ii): Whether the joint will created only a limited life interest in the survivor, or conferred full ownership with power of disposition, so that the property could not be treated as settled property within section 2(19) of the Act.

Analysis: The Court construed the will as a whole and held that the dominant intention was to confer full ownership on the survivor, not merely a life interest. The language that the survivor would "become the owner" was treated as deliberate and uncut down by the references to rents and income. The bequests to the grandsons were to become effective only after the death of the survivor, which meant that no present settlement in their favour arose on the first death. The Court also held that mutuality, sufficient to make the will irrevocable, was not proved merely because the dispositions were reciprocal; a clear and definite agreement not to revoke had to be shown, and no such agreement was established. As a result, the survivor had full power of disposition and the property was not settled property within the meaning of section 2(19).

Conclusion: The deceased took an absolute interest in the property as survivor, section 29 did not operate to exempt the half share, and the answer to the reference was against the accountable person and in favour of the Revenue.

Final Conclusion: The reference failed because the disputed property was not treated as settled property in the relevant sense, and the survivor was held competent to dispose of it; accordingly, estate duty remained chargeable on the deceased's interest.

Ratio Decidendi: A mutual or joint will does not by itself create an irrevocable settlement; to displace the survivor's full ownership and attract exemption from estate duty on the footing of settled property, a clear agreement not to revoke and a present limitation on disposition must be established from the will or other evidence.

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