Deemed disposition on unequal HUF partition: shortfall in the deceased's share was chargeable to estate duty.

Under the Estate Duty Act, 1953, an unequal partition of Hindu undivided family property can be treated as a deemed disposition where the deceased coparcener takes less than his lawful share and the resulting benefit accrues to relatives. Section 27 read with Explanation 2 to section 2(15) creates a statutory fiction under which extinguishment of the deceased's right at his expense is deemed a transfer, even though partition is not a transfer in ordinary property law. The earlier estate duty view was treated as continuing good law, and the excess value representing the shortfall in the deceased's share was chargeable as property deemed to pass on death.

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Issues: Whether the difference between the deceased's lawful share in Hindu undivided family property and the lesser share actually allotted on partition within two years before death was includible in the estate as property deemed to pass on death under section 9(1) read with section 27 and Explanation 2 to section 2(15) of the Estate Duty Act, 1953; and whether the earlier view treating such unequal partition as a deemed disposition remained good law.

Analysis: A partition is not a transfer in the ordinary sense under property law, but section 27 of the Estate Duty Act, 1953, read with Explanation 2 to section 2(15), creates a special statutory fiction. Under that Explanation, extinguishment of a right at the expense of the deceased, resulting in a benefit to another, is deemed to be a disposition in the nature of a transfer. The court held that this deeming provision is materially different from the definition considered under the Gift-tax Act and that the Supreme Court decision on the Gift-tax Act did not displace the earlier estate duty view. It further held that the contrary decisions of other High Courts did not give due effect to the statutory fiction in Explanation 2. On that basis, an unequal partition in favour of relatives can attract section 9 read with section 27 where the deceased relinquishes part of his share and the beneficiary receives the resulting advantage.

Conclusion: The sum representing the difference between the deceased's rightful share and the property actually allotted was rightly included in the estate as property deemed to pass on death, and the reference was answered against the accountable persons.

Final Conclusion: The statutory fiction under the Estate Duty Act operated to treat the relinquished share as a deemed disposition in favour of relatives, making the excess value chargeable to estate duty.

Ratio Decidendi: Where a deceased coparcener, on a partition within the relevant period, takes less than the share to which he is entitled and the resulting benefit accrues to relatives, the extinguishment of his right is a deemed disposition under Explanation 2 to section 2(15) and is chargeable under section 9(1) read with section 27 of the Estate Duty Act, 1953.

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