TaxTMI 
TaxTMI 
1979 (7) TMI 33
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.... son, Sahu Jagdish Prasad. The family was joint at the time of the death of Raja Lalta Prasad. On April 10, 1933, a partial partition took place, which was followed by a final partition on December 18, 1941. In that, Rani Kalawati relinquished all her claim to the property in consideration of a monthly payment of Rs. 125 to her during her lifetime by each of her four sons. The sons undertook personal liability to pay the amount, and, further, under the terms of the deed, the properties held by them were expressly charged for the payment of the amount. We will refer to the relevant clause of the deed a little later. Rani Kalawati died on December 16, 1955, and Kr. Harish Chandra filed a return. In the return filed, the value of the annuity of Rs. 6,000, which the deceased was receiving, was omitted. The Asst. CED taking the view that the deceased had an interest in the properties to the extent of Rs. 6,000, added the like amount to the value of the estate of the deceased assessable under ss. 7 and 40 of the Act. The order was confirmed in appeal both by the Zonal Appellate Controller and the Tribunal. Counsel for the assessee contended that s. 7 was not attracted as the deceased did....
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....RD, FOURTH, FIFTH and the SIXTH parts agree and undertakes, jointly and severally to pay to her, the said RANI KALAWATI, their mother, a sum of Rs. 125 (Rupees one Hundred and Twenty-Five) per month during her lifetime. PROVIDED that the right to receive the said sum of Rs. 125 (Rupees one Hundred and Twenty-Five) per month from EACH of her sons, namely, the parties hereto of the THIRD, FOURTH, FIFTH and the SIXTH parts is personal to the said Rani Kalawati, the party hereto of the SEVENTH part, and is not transferable and upon her death the said right to receive the said amount from the aforesaid parties would terminate. This is followed by cl. 3 of the substantive part of the agreement, which is to the following effect : " Clause 3.--THAT IN CONSIDERATION OF THE AGREEMENT AFORESAID and in consideration of monthly payment of a sum of Rs. 125 (Rupees one hundred and twenty-five only) to the said Rani Kalawati the party hereto of the SEVENTH part, during her lifetime by EACH of her four sons, namely, the parties hereto of the THIRD, FOURTH, FIFTH and the SIXTH parts, the said Rani Kalawati the party hereto of the SEVENTH part doth hereby relinquish all her claims whether by wa....
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....s of the sons, a charge was also created in respect of the ancestral properties, which the sons received on partition. These properties are set out in the Schedules to the partition deed. This contention, thus, cannot be accepted. It may be pointed out that the Sind decision relied upon is in consonance with the view that we have taken, for, in that case too, a charge had been created in respect of existing assets and there was a further stipulation that other assets which may come into existence in future will stand for the charge for the loan. It was held that an immediate charge came into existence in respect of the properties, which were held by the debtor on the date of the agreement. It was then urged that as the sons had never committed any default in the payment of the annuity, the occasion for applicability of cl. 3 of the deed never arose, and as such the charge, if any, remained contingent or inchoate. This contention is based upon a misconception of s. 100 of the Transfer of Property Act. The relevant part of s. 100 of the Transfer of Property Act runs as under : " 100. Where immovable property of one person is by act of parties or operation of law made security for ....
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....a charge creates a right to receive payment out of some specified properties. A mortgage is jus in rem while a charge is jus ad rem. Now, s. 7 does not require that there should be a transfer of an interest in the property like that in the case of a mortgage. It rests satisfied in case the deceased had an interest in property. When a charge is created, a right which is something more than personal obligation comes into existence, that being a right to receive payment out of the specified property. There is, in principle, very little difference between a charge and a simple mortgage, the main difference being that while in a mortgage the right is good against subsequent transfers, in the case of a charge, it is good only against subsequent transfers with notice or volunteers with or without notice. As Rani Kalawati Devi had a right to receive payment out of the property specified in the deed, we are of the view that she had an interest in the property to the extent of the annuity payable to her, for, she could look upon that property for realisation ofthe annuity. On the death of Rani Kalawati the properties which were charged were absolved and a benefit accrued to the sons in so fa....