Contractual right to death compensation treated as estate property under deeming rules, and included in the taxable estate

Under the Estate Duty Act, a contractual right to compensation payable on an employee's death was treated as property because the deceased had an existing enforceable interest during life and was competent to dispose of it. The inclusive definition of property was held wide enough to cover incorporeal rights and choses in action, and section 6 deemed such rights to pass on death where the deceased could dispose of them at death. The compensation received by the widow was therefore included in the principal value of the estate and was liable to estate duty.

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Issues: Whether the compensation of Rs. 68,300 received by the widow on the deceased employee's death was property within the meaning of section 6 of the Estate Duty Act, 1953 and therefore includible in the principal value of the estate.

Analysis: The charging provision of the Estate Duty Act fastens duty on property passing on death, while section 6 deems property of which the deceased was competent to dispose at the time of death to pass on death. The term "property" is defined inclusively and is wide enough to include incorporeal rights and choses in action. A right to compensation arising from the deceased's employment, though payable only on death, was treated as an existing right during his lifetime, because it formed part of the contractual remuneration structure and could be nominated or disposed of by him. The reasoning followed the principle that statutory deeming under the estate duty law can bring within charge rights which are not physically enjoyed before death but in which the deceased had a real interest and dispositive power.

Conclusion: The compensation amount was held to be property within section 6 of the Estate Duty Act, 1953 and was liable to be included in the estate.

Final Conclusion: The reference was answered by holding that the compensation was chargeable estate property and the inclusion made by the revenue was sustained.

Ratio Decidendi: For estate duty purposes, a contractual right to compensation payable on death can amount to property if the deceased had an enforceable interest in it during life and was competent to dispose of it, so that section 6 deems it to pass on death.

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