TaxTMI 
TaxTMI 
1991 (12) TMI 15
X X X X Extracts X X X X
X X X X Extracts X X X X
....was includible in the principal value of the estate on his death? 3. Whether, on the facts and in the circumstances of the case, the value of the agricultural lands received by the late P.S. Srinivasa Iyer by way of settlement from the late Shri Ganapathi Subramaniam could be included in the principal value of the estate of the deceased ? " The circumstances giving rise to the aforesaid questions in these references are as follows : One Sri Krishna Iyer of Kaniyur owned extensive agricultural properties and he died in 1898, leaving behind him, three sons, of whom, the eldest was Sri Venkatakrishna Iyer. Under a will of his father, Sri Krishna Iyer, Venkatakrishna Iyer obtained certain properties. After the death of Sri Krishna Iyer, under partitions effected between Venkatakrishna Iyer and his two brothers on December 8, 1923, and December 10, 1923, in respect of the properties not covered by the will of Sri Krishna Iyer, Venkatakrishna Iyer obtained certain other properties. Venkatakrishna Iyer had a son, Rajagopala Iyer and a daughter, Thangammal, and Rajagopala Iyer, in turn, had a son and a daughter. Rajagopala Iyer and his son pre-deceased Venkatakrishna Iyer and he a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... About nine months thereafter, the settlees from Ganapathy Subramaniam instituted a suit in O.S. No. 97 of 1964, Sub-court, Coimbatore, for cancellation of the deeds of release executed by them on September 20, 1962, on the ground that they were brought about as a result of undue influence and coercion and the accountable person, viz., Kamala, who was the sole defendant in that suit, supported their case and ultimately on November 26, 1964, the suit was decreed. In the course of the proceedings under the Act on the return filed by the accountable person showing the principal value of the estate of the deceased Ganapathy Subramaniam at Rs. 24,03,560, the Assistant Controller of Estate Duty included all the lands, which originally belonged to the deceased, as passing on the death of the deceased and completed the assessment, fixing the value of the estate, which passed, at Rs. 76,30,831. In so doing, the Assistant Controller divided the lands, which belonged to the deceased as under : (1) Some lands (a half share in which was released by the deceased's settlees as stated already) were owned by the deceased and the five settlees of Kamala, as tenants-in-common, the deceased having ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ate passing under section 5 or 6 of the Act, even without reference to section 10. In regard to the appeal by one of the settlees from the deceased, the Tribunal took the view that the value of those lands should be deleted from the estate duty assessment of the deceased Narasimhan, brother-in-law and one of the settlees from the deceased Ganapathy Subramaniam, as those lands were held to have passed on the death of the deceased Ganapathy Subramaniam and there was no proprietary or other interest in those lands in favour of P. S. Srinivasa Iyer, father-in-law of the deceased Ganapathy Subramaniam or Sri Narasimhan, brother-in-law of the deceased Ganapathy Subramaniam. It is on the basis of the aforesaid conclusions arrived at by the Tribunal that the three questions set out earlier have come up for consideration before this court. In so far as the first question relating to the includibility of the value of the agricultural lands settled by the deceased Ganapathy Subramaniam in favour of his wife, Kamala (inclusive of the lands settled by Kamala in favour of her other relatives ), is concerned, it has to be borne in mind that under the settlement deed dated June 17, 1956, the de....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er mother, two sisters and two sisters-in-law and this was also only in respect of an undivided one tenth share for each of the settlees. The other half of the properties retained by the deceased had been settled by him, again in undivided shares, in favour of his father-in-law, three brothers-in-law and a sister-in-law, each having been given an undivided one-tenth share. When the agricultural lands in several survey numbers had been dealt with under the settlement deeds in undivided shares, it is difficult without a partition to conceive of the donees' bona fide assumption of possession and enjoyment of the properties, which formed the subject-matter of the gifts and also the retention of such possession and enjoyment by the donees to the exclusion of the donor or of any benefit to him by contract or otherwise. Indeed, we find no material, as such, to establish the assumption of possession of the lands settled in favour of Kamala or by her, in favour of the other five settlees, to the exclusion of the deceased. No doubt, reliance was placed upon certain composition proceedings under section 34 of the Tamil Nadu Agricultural Income-tax Act. However, it is seen from those proceedin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mediately and also retained such possession to the exclusion of the donor. We also find that the deceased had not been excluded from any benefit by the settlements effected either in favour of his wife or by her, in turn, in favour of the other settlees. The formation of a firm in the name of Kamala & Co. on January 1, 1957, consisting of the wife of the deceased, and the settlees from her, as partners, had already been referred to. It is seen from para 14 of the order of the Assistant Controller that the sale proceeds of some items stated to have been sold by Kamala were credited in the books of account of the deceased to her account and the proceeds had been retained by the deceased till his death. Apart from this, it is seen that the deceased had availed, ostensibly as a loan, of a sum of Rs. 69,974 from Kamala and Co. and this liability had been taken over by the deceased Ganapathy Subramaniam exclusively, after the dissolution of K.V.G.S. and Co. We are of the view that this would point out that the deceased was the real beneficiary of the income from the operations of Kamala and Co. The Tribunal had stated, in para 12 of its order, that there is nothing to show that the settl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and the entire liability was taken over by the deceased exclusively. Further, the entering into a deed of partition on September 20, 1962, by the deceased and his wife, clearly indicated that bona fide immediate possession of the properties settled, in favour of the wife by the deceased and the settlees from her as well, could not have been taken and retained, to the exclusion of the donor. The document of partition dated September 20, 1962, had been entered into between the deceased and his wife and it is stated that they are members of joint Hindu family, despite the formation and the carrying on of business under the name and style of K.V.G.S. and Co. and Kamala and Co. From this, it would follow that even according to the deed of partition as late as September 20, 1962, the deceased and the settlees had asserted their ownership of the properties dealt with under that document, as members of a joint Hindu family and that, in our view, would negative any exclusion of the properties settled by the husband in favour of his wife on June 17, 1956, by the wife having immediately taken possession of the properties settled, to the exclusion of her husband. When once the deceased and his....