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Issues: (i) Whether the value of the agricultural properties covered by the partition deed dated 15 July 1951 was includible in the deceased's estate under section 10 of the Estate Duty Act; (ii) Whether the value of the money-lending business was chargeable to estate duty under section 9 of the Estate Duty Act.
Issue (i): Whether the value of the agricultural properties covered by the partition deed dated 15 July 1951 was includible in the deceased's estate under section 10 of the Estate Duty Act.
Analysis: The recitals in the partition deed, read with the subsequent conduct of the parties, showed an unequivocal intention by the deceased to treat his self-acquired properties as joint family property. Such conversion under Hindu law does not require formalities. The evidence also showed that the partition was acted upon, separate accounts were maintained, and the sons were in separate possession and enjoyment of their respective shares. On these facts, the properties could not be treated as a gift attracting section 10, and there was no retention of possession or enjoyment by the deceased to bring the properties within that provision.
Conclusion: The value of the agricultural properties was not includible in the estate under section 10; this issue is answered in favour of the assessee.
Issue (ii): Whether the value of the money-lending business was chargeable to estate duty under section 9 of the Estate Duty Act.
Analysis: The money-lending business remained the deceased's individual business until 4 October 1957. There was no material to show that it had earlier been impressed with the character of joint family property, and the document of 4 October 1957 itself treated it as self-acquired property. The division of that asset among the deceased and his sons therefore amounted to a gift, and the sons acquired their shares within two years of the deceased's death. The business assets were accordingly liable to be deemed to pass on death under section 9.
Conclusion: The value of the money-lending business was rightly included in the estate under section 9; this issue is answered against the assessee.
Final Conclusion: The reference was answered partly in favour of the accountable persons and partly in favour of the revenue, with the agricultural properties excluded from estate duty but the money-lending business held chargeable.
Ratio Decidendi: Self-acquired property may be impressed with the character of joint family property by an unequivocal declaration and, where the transferee enjoys exclusive possession and enjoyment, section 10 does not apply; but a later division of self-acquired business property as such constitutes a gift and, if made within the statutory period before death, attracts section 9 as property deemed to pass on death.
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