Benami property and estate duty: shares held in others' names remained chargeable in the real owner's estate on death.

Benami-held shares were includible in the deceased's estate under section 5(1) of the Estate Duty Act because the deceased supplied the full consideration and remained the real owner; the named holders had no beneficial interest. Section 5(1) was treated as the charging provision for property passing on death, and section 6 was held to be supplemental and incapable of cutting down that charge. On those facts, estate duty arose on the death of the real owner, not on the death of the benamidars, so the challenge to inclusion failed and the entire value of the shares was chargeable to estate duty.

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Issues: Whether shares standing in the names of the wife, sons, brother-in-law and ex-employee as benamidars of the deceased were includible in the principal value of the estate under section 5(1) of the Estate Duty Act, 1953, and whether section 6 of that Act prevented such inclusion.

Analysis: The deceased had supplied the entire consideration for the shares, and the named holders were found to be mere benamidars. In a benami transaction, the benamidar has no beneficial interest, the real ownership remains with the person providing the consideration, and the real owner can deal with the property as his own. Section 5(1) is the charging provision for property passing on death, while section 6 is supplemental and cannot curtail the operation of section 5(1). The legislative scheme of the Estate Duty Act is to tax property that passes on death and also property deemed to pass on death, but the charge under section 5(1) remains independent. On the facts, the deceased was the real owner, and the estate duty liability arose on his death, not on the death of the benamidars.

Conclusion: The shares were rightly includible in the estate of the deceased under section 5(1), and the contention based on section 6 failed. The answer was therefore in the affirmative and in favour of the Controller.

Final Conclusion: The appeal succeeded, the High Court's answer was set aside, and the entire value of the benami-held shares was held chargeable to estate duty in the deceased's estate.

Ratio Decidendi: Where property is held benami, estate duty under section 5(1) is attracted on the death of the real owner because the benamidar has no substantive ownership, and section 6 does not limit or exclude the charging effect of section 5(1).

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