2002 (8) TMI 58

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....29, and a release deed executed by him in April, 1937, the right to collect for herself the rents and income from the property bearing 84, Purasawalkam High Road, Kilpauk, Madras. The right given to the assessee was described in the release deed in which late Smt. Jayalakshmi is referred to as a releasee, in these terms: "...from this date the releasee shall be entitled to collect for herself the rents and income from the said properties as her own income...." The right acquired by the deceased Smt. Jayalakshmi was, therefore, the right to receive the whole of the income from the property. The Assessing Officer invoked section 7 of the Estate Duty Act which deals with interest ceasing on death and after applying the provisions of s....

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....he extent to which a benefit accrues or arises by the cesser of such interest. In this case, the right to enjoy the income of the property was a right which the children of the deceased did not have during the lifetime of the mother. That right is a benefit which accrued to them on the mother's demise. It cannot, therefore, be said that no benefit accrued to the accountable persons after the interest of their mother in the property, which interest was the right to receive the whole of the income from the property ceased, on her death. Learned counsel for the Revenue in this context invited our attention to the decision of the Supreme Court in the case of CWT v. Prince Muffakham Jah Bahadur Chamlijan [2001] 247 ITR 351, wherein, the court....

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....ing on death.--The value of the benefit accruing or arising from the cessor of an interest ceasing on the death of the deceased shall- (a) if the interest extended to the whole income of the property, be the principal value of that property; and (b) if the interest extended to less than the whole income of the property, be the principal value of an addition to the property equal to the income to which the interest extended." This section introduces an artificial mode of valuation of the benefit which accrued to the persons entitled thereto after the cessation of the life interest of the deceased. Although under the terms of the settlement deed which created the life interest, the reversionary interest is specifically given to other....