Adverse possession defeated estate duty where donees had long enjoyed settled land as owners, extinguishing the settlor's life interest.

A settled agricultural property was treated as outside the deceased's estate under the Estate Duty Act because the donees had long possessed and enjoyed it as owners. The settlement deed reserved life interest to the settlor, but the evidence of continuous possession, payment of land revenue, further gifts made from the land, affidavits, and village records showed that title had already matured in the donees by adverse possession before death. The settlor's life interest was therefore extinguished, she had no beneficial interest for more than two years before death, and no property passed on death to attract estate duty.

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Issues: Whether the value of the settled agricultural land was includible in the deceased's estate under the Estate Duty Act on the footing that the deceased retained life interest, or whether the donees had already acquired full title by adverse possession so that no property passed on the death.

Analysis: The settlement deed reserved life interest in favour of the settlor, but the evidence showed that the donees had been in actual enjoyment of the land for a long period, were dealing with it as owners, were paying land revenue, and had even made further gifts out of the property. The affidavits and village records supported continuous possession and enjoyment by the donees, and the Court accepted that such possession had ripened into title by adverse possession well before the deceased's death. On that footing, the deceased's life interest stood extinguished and she was excluded from any benefit in the property for more than two years prior to death. As a result, no property passed on death so as to attract estate duty.

Conclusion: The inclusion of the value of the 7.86 acres in the estate was not justified and was liable to be deleted.

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