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Issues: Whether the monetary equivalent of unavailed leave salary paid to the deceased employee's widow was property passing on death so as to attract estate duty under the Estate Duty Act, 1953.
Analysis: Estate duty is attracted only where there is property passing on death within the meaning of section 5, or property deemed to pass under the Act. The decisive inquiry is whether the deceased had an existing property interest before death which could be said to pass at death. The leave-salary amount had not accrued as a due to the deceased during his lifetime, because it became payable only upon the employee's death and was treated as an ex gratia payment on compassionate grounds to the legal heirs. In those circumstances, the deceased had no property in existence in respect of the amount before death, and a mere right to nominate beneficiaries did not create property capable of being deemed to pass.
Conclusion: The amount of leave salary was not liable to estate duty and was not property passing on death; the issue was decided in favour of the assessee.
Ratio Decidendi: Estate duty under sections 5 and 6 applies only to property existing in the deceased's hands before death and passing on death or deemed to pass under the Act; an amount that is not due to the deceased during life and is payable only as an ex gratia compassionate payment to heirs is not such property.
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