TaxTMI 
TaxTMI 
1966 (11) TMI 93
X X X X Extracts X X X X
X X X X Extracts X X X X
.... means a dignity and denotes the status of the senior Raja in a Malabar Kovilgom or palace. It is surmised that sthanams were also created by the Rajas by giving certain properties to military chieftains and public officers and also by tarwads creating them and allocating certain properties for their maintenance. Most of the incidents of a sthanam are well settled. Usually the seniormost male member of the family and occasionally a female member attains a sthanam. Properties are attached to the sthanam for the maintenance of its dignity. The legal position of a sthanee is equated to that of a Hindu widow in that he represents the estate for the time being and he can alienate the properties for necessity or for the benefit of the estate. Unlike a Hindu widow, the successor to a sthanee is always a life-estate-holder. In that respect his position is more analogous to an impartible estate-holder. He ceases to have any present interest in the tarwad properties. Like a Hindu widow or an impartible estate-holder, he has an absolute interest in the income of the sthanam properties or acquisitions therefrom. His position is approximated to a member separated from the family and that the me....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ove. Section 5 of the Estate Duty, 1953, is the charging section of that Act. It reads as follows : "(1) In the case of every person dying after the commencement of this Act, there shall, save as hereinafter expressly provided, be levied and paid upon the principal value ascertained as hereinafter provided of all property, settled or not settled, including agricultural land situate in the territories which immediately before the 1st November, 1956, were comprised in the States specified in the First Schedule to this Act and in the Union territories of Dadra and Nagar Haveli, Goa, Daman and Diu and Pondicherry which passes on the death of such person, a duty called ' estate duty ' at the rates fixed in accordance with section 35. (2) The Central Government may, by notification in the official Gazette, add the names of any other States to the First Schedule in respect whereof resolutions have b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....says : " 'Estate duty' means estate duty under this Act." There is a definition in article 366 of the Constitution. It says: " 'Estate duty' means a duty to be assessed on or by reference to the principal value, ascertained in accordance with such rules as may be prescribed by or under laws made by Parliament or the Legislature of a State relating to the duty, of all property passing upon death or deemed, under the provisions of the said laws, so to pass." Section 5 of the Estate Duty Act, 1953, corresponds to section 1 of the United Kingdom Finance Act of 1894, which imposed for the first time an estate duty in that country. The meaning of the words "passes on the death" has not been the subject of a definition either in the Act of the United Kingdom or of this country. As stated in Mahendra Rambhai Patel v. Controller of Estate Duty [1955] 55 ITR (ED) 1, 15 : "... it would be a fair presumption to make that when the legislature enacted our Act, the legislature used the expression ' passes on the death' in the sense in which it had been judicially interpreted in England. We might, therefore, usefully refer to English decisions on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssion Act, 1956, in its application to the State of Kerala,- (a) In sub-section (3) between the words 'him' and 'shall', the words 'or her', between the words 'himself' and 'and', the words 'or herself' and between the words 'his' and 'family' in the two places where they occur, the words ' or her ' shall be respectively inserted. (b) In the Explanation to sub-section (3) the word 'male' shall be omitted. (c) The existing explanation to sub-section (3), shall be numbered as Explanation I and the following shall be added as Explanation II. Explanation II.-The devolution of sthanam properties under sub-section (3) and their division among the members of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ax v. Ajax Products Ltd. [1965] 55 ITR 741 (SC) The first portion of sub-section (3) of section 7 clearly shows that what passes on the death of a sthanamdar is the whole of the sthanam property held by him. It says : "When a sthanamdar dies after the commencement of this Act, the sthanam property held by him shall devolve upon the members of the family to which the sthanamdar belonged and the heirs of the sthanamdar." The second portion of that sub-section has nothing to do with the extent of the property that passes on the death of a sthanamdar. It only deals with the distribution of that property, the distribution directed being "as if the sthanam property had been divided per capita immediately before the death of the sthanamdar among himself and all the members of his family then living." The device of the "as if" should be confined to the purpose for which it was intended. Leach M.R. said in Parr v. Parr [1883] 2 LJ Ch. 167, that the word "devolve" means to pass from a person dying to a person living and that "the etymology of the word shows its meaning". We entertain no doubt that it is in the sense indicated by the Master of the Rolls that the word "devolv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....swers: Questions Answers 1.What is the extent of the property that passes or is deemed to pass on the death of a sthanamdar ? The whole of the sthanam property, 2.On whom does the sthanam pro-perty devolve on the death of a sthanamdar ? On the members of the family to which the sthanamdar belonged and the heirs of the sthanamdar. 3.In what manner does the devolution take place ? As if the sthanam property had been divided per capita immediately before the death of the sthanamdar among himself and all the members of his family then living. 4.What is the extent of the property that attracts estate duty on the death of a sthanamdar ? The whole of the property that passes or is deemed to pass on the death of a sthanamdar, namely, the whole of the sthanam property. In the light of what is stated above, Writ Appeals Nos. 119, 174, 179 and 338 of 1965 have to be allowed and Writ Appeal No. 276 of 1965 has to be dismissed. We do so, but in the circumstances of the case without any order as to costs. Velu Pillai J.-I agree, but would like to add a few words of my own on the interpretation of section 7(3) of the Hindu Succession Act, 1956. The st....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d to have fallen to the sthanamdar just before his death, as provided by section 7(3) of the Hindu Succession Act. This section has been extracted in the leading judgment. It seems to me not open to doubt that, except to the extent specially provided for in the Estate Duty Act, what property passes on a man's death has to be judged with reference to the relevant rule of substantive law applicable to him. In this sense, section 7(3) of the Hindu Succession Act may be said to lay down a rule of substantive law as to sthanam property. But if, on a true construction, section 7(3) may be held to lay down only a rule of succession to sthanam property on the death of the sthanamdar, that is, of distribution of sthanam property between his successors, it is not to be supposed that it also lays down a rule for the imposition of estate duty as to what the sthanamdar died possessed of and what passed on his death to his successors as a body. What the Estate Duty Act "taxes is not the interest to which some person succeeds on a death, but the interest which ceases by reason of the death": see M.C.J. Kagzi on Estate Duty in India, 1962 Edition, page 3, quoting from Hanson's Death Dut....