Partition of Hindu joint family property is not a deemed disposition under estate duty law where no transfer of interest occurs.

A release deed between coparceners was analysed for its true character under the Estate Duty Act and held to be, in substance, a partition of joint Hindu family property. Partition converts joint enjoyment into enjoyment in severalty and does not involve a transfer or disposition of interest between coparceners, so section 27(1) and section 9(1) were not attracted. Explanation 2 to section 2(15) also did not apply, because partition does not amount to extinguishment of a debt or other right at the expense of the deceased. The revenue could not recharacterise the arrangement as a partial relinquishment merely because the value of the share later differed in departmental assessment.

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Issues: Whether the release deed executed between the coparceners was in substance a partition or a renunciation of the deceased's interest, and whether it constituted a disposition in favour of a relative under section 27(1) read with Explanation 2 to section 2(15) so as to attract estate duty under section 9(1).

Analysis: The instrument, though styled as a release deed, showed that the joint family properties were divided between the two coparceners, with the deceased taking Rs. 1,00,000 and the remaining properties going to the other coparcener. Partition in Hindu law is a process by which joint enjoyment is transformed into enjoyment in severalty, and it does not involve a transfer of interest from one coparcener to another. On that footing, the transaction did not amount to a disposition within section 27(1). Nor did Explanation 2 to section 2(15) apply, because partition does not involve extinguishment of a debt or other right at the expense of the deceased within the meaning of that Explanation. The revenue could not recast the partition as a partial relinquishment merely because the share taken was less than the value later attributed by the department.

Conclusion: The transaction was not a disposition in favour of a relative under section 27(1), and the deeming provisions were not attracted; the answer to the reference was in the negative, in favour of the accountable person.

Ratio Decidendi: A partition of joint Hindu family property does not amount to a disposition or deemed disposition under the Estate Duty Act because it involves no transfer of interest in property between coparceners.

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