Estate duty on retained-benefit transfers applies where the donor keeps a life benefit and successor liability follows

A transfer supported by annuity was not a gift in the ordinary sense under the Transfer of Property Act, but for estate duty purposes section 10 of the Estate Duty Act, 1953 applied because the donor retained a life benefit and was not wholly excluded from enjoyment. On that basis, the property was treated as passing on death by the statutory fiction in sections 6 to 10. Section 53(1)(c) also made the person in possession through derivative title accountable for the duty, limited to the assets actually received. The applicant's 1/4 share was therefore liable to estate duty, and the applicant was an accountable person.

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Issues: Whether the applicant's 1/4 share in the properties was liable to estate duty as property deemed to pass on the donor's death, and whether the applicant was an accountable person in respect of that share.

Analysis: The transfer deed of 1936 was not a gift in the ordinary sense under section 122 of the Transfer of Property Act, 1882 because it was supported by consideration in the form of an annuity. However, for estate duty purposes, section 10 of the Estate Duty Act, 1953 applies where property is taken under a gift and the donor retains a benefit to himself. The deceased retained a life annuity and was not entirely excluded from benefit, so the statutory conditions laid down for section 10 were satisfied. The legal fiction created by sections 6 to 10 of the Estate Duty Act, 1953 requires the property to be treated as passing on death with all its necessary consequences. Section 53(1)(c) further makes a person vested in possession through alienation or derivative title accountable for the duty on the property passing on death, subject to limitation of liability to the assets actually received.

Conclusion: The applicant's 1/4 share was correctly treated as property deemed to pass on the deceased's death, and the applicant was liable as an accountable person for estate duty on that share. The answer was therefore against the applicant and in favour of the Revenue.

Ratio Decidendi: Where the donor retains a benefit in gifted property, section 10 of the Estate Duty Act, 1953 applies, and liability to estate duty extends to a successor holding the property through derivative title under section 53(1)(c).

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