Estate duty reopening, residential-house deduction and relief provisions: permissive occupation and later legal decisions shaped the result.

Reopening under the estate duty law was valid where the assessing authority relied on a later judicial decision stating the correct legal position, together with material showing under-valuation and escapement of duty. The residential-house deduction was not available because the deceased had already transferred possession and remained in the property only as a permissive occupant, not under an enforceable right of residence; the deeming inclusion of the house in the estate did not extend the exemption. Interest for delayed filing was not attracted to the reassessment, but relief for gift-tax paid had to be granted under the specific estate duty relief provision, not by reference to the gift-tax deduction rule.

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Issues: (i) Whether the reassessment under the estate duty reopening provision was valid on the basis of information received from a judicial decision and the material on record; (ii) whether the value of the gifted residential house, brought into the estate by the deeming provision, qualified for deduction for a house exclusively used by the deceased for residence; (iii) whether interest could be levied in the reassessment and whether relief could be granted with reference to the gift-tax deduction provision.

Issue (i): Whether the reassessment under the estate duty reopening provision was valid on the basis of information received from a judicial decision and the material on record.

Analysis: The reassessment was upheld as the later judicial decision constituted information as to the true state of the law within the reopening provision. The assessment was also reopened on the basis of under-valuation discovered from the gift-tax assessment, which furnished reason to believe that duty had escaped assessment. The record did not support the contention that the reopening was directed by the Controller rather than initiated on the assessing authority's own satisfaction.

Conclusion: The reopening was valid and the challenge failed.

Issue (ii): Whether the value of the gifted residential house, brought into the estate by the deeming provision, qualified for deduction for a house exclusively used by the deceased for residence.

Analysis: The deceased had transferred possession of the house to the donee, and on the date of registration the donee's title became complete. The deceased remained in occupation only as a permissive user and not in exercise of a legal right of residence. The deduction for a house exclusively used by the deceased requires a right of use and cannot be claimed where occupation is merely permissive. The analogy drawn from wealth-tax cases was rejected because the estate duty statute contained no equivalent provision extending the residential exemption to property included by the deeming fiction.

Conclusion: The deduction was not allowable and the assessee's challenge failed.

Issue (iii): Whether interest could be levied in the reassessment and whether relief could be granted with reference to the gift-tax deduction provision.

Analysis: Interest under the estate duty provision for delayed filing was not attracted to a reassessment made under the reopening provision, so the deletion of interest was upheld. However, the direction to allow deduction by reference to the gift-tax Act provision was modified because the estate duty statute provided a separate relief provision for gift-tax paid, and that was the proper basis for relief.

Conclusion: The deletion of interest was upheld, and the relief was confined to the estate duty relief provision rather than the gift-tax deduction provision.

Final Conclusion: The assessee's challenge to the reopening and to denial of the residential-house deduction failed, while the departmental challenge succeeded only to the limited extent of correcting the basis of relief, leaving the interest deletion intact.

Ratio Decidendi: Information for reopening includes a later judicial decision declaring the correct legal position, and a residential-house deduction under the estate duty law is unavailable where the deceased's occupation after transfer is only permissive and not pursuant to an enforceable right of residence.

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