Provident fund rule 33A payment excluded from estate duty where deceased had no power of disposition over it.

The additional amount payable under rule 33A of the General Provident Fund (Central Services) Rules was held not to form part of the principal value of the estate under sections 6 and 15 of the Estate Duty Act, 1953. The amount arose by operation of the rule, not from any power of disposition vested in the deceased, and the nomination power under the provident fund rules extended only to the subscriber's own credit balance, not to the additional rule 33A payment. As the deceased could not nominate a person different from the one entitled to the provident fund balance, the amount was not property over which he was competent to dispose at death. The taxpayer-favourable construction in case of doubt supported exclusion.

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Issues: Whether the amount received under rule 33A of the General Provident Fund (Central Services) Rules was includible in the principal value of the estate of the deceased under sections 6 and 15 of the Estate Duty Act, 1953.

Analysis: The additional amount payable under rule 33A was found to arise by operation of the rule and not by any power of disposition vested in the deceased. The power of nomination under the provident fund rules extended only to the balance standing to the credit of the subscriber and did not extend to the additional amount payable under rule 33A. The deceased could not have nominated a person different from the one entitled to receive the provident fund balance, and the amount was therefore not property over which he was competent to dispose at the time of death. The decision relied on by the department was distinguished, while the decision supporting the accountable person was followed. Applying the rule that, in case of doubt under a taxing statute, the view favourable to the taxpayer must prevail, the exclusion of the amount was upheld.

Conclusion: The amount was not includible in the principal value of the estate under sections 6 or 15 of the Estate Duty Act, 1953, and the objection of the department failed.

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