1974 (6) TMI 9

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....ter, he changed his mind and executed a deed of settlement on December 1, 1962, in respect of the same ten acres of land, which he had sold on September 11, 1954, in favour of Seetharamamma, to his brother-in-law's son, D. S. Reddy, and latter's wife, Indiramma. In this sale deed, he stated that the sale deed dated September 11, 1954, in favour of Seetharamamma was a sham transaction and was never intended to be acted upon. 20 days later, to be precise, on December 21, 1962, the deceased executed a revocation deed cancelling the gift of September 5, 1957, in respect of six acres of land in favour of Seetharamamma, stating that the gift in her favour was a sham transaction. On December 25, 1962, he executed a settlement deed in respect of the same six acres of land in favour of D. S. Reddy and his wife. Seetharamamma took objection to this and filed O.S. No. 33/1963 in the Subordinate Judge's Court, Kavali, on July 5, 1963, praying for a permanent injunction restraining the defendants, who included the deceased, Krishna Reddy, averring that she had been in possession of the entire 16 acres of land ever since that had been conveyed to her. The parties, however, compromised the matter....

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....eceased conveyed to Seetharamamma ten acres of land. Similarly, on September 5, 1957, he executed a deed of gift in her favour in respect of the other extent of six acres. When the deceased person tried to resile from these transactions, Seetharamamma filed O.S. No. 33/1963, claiming that she had acquired absolute rights in the lands under the sale deed and the gift deed, that she had been in possession of the respective lands ever since the dates of conveyance and that the defendants had no manner of right to interfere with her possession. It was on this basis, she sought the relief of permanent injunction restraining the defendants from interfering with her possession of the 16 acres of land. It may be noted here that the deceased person was the first defendant in the suit and D. S. Reddy and his wife were defendants Nos. 2 and 3. These defendants asserted that the conveyances in favour of Seetharamamma were sham and nominal and the possession of the land continued with Krishna Reddy and subsequently on execution of the deeds of December 1, 1962, and December 21, 1962, D. S. Reddy and his wife came to be in possession of the properties. It was these claims and contentions that we....

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....Krishna Reddy on December 25, 1962. This clearly shows that the settlement deed in favour of Seetharamamma dated September 5, 1957, was cancelled and the settlement deed in favour of D. S. Reddy and his wife dated December 25, 1962, was agreed to be given effect to. In other words, D. S. Reddy and his wife, Indiramma, get the six acres of land as per the terms of the settlement deed executed in their favour by Krishna Reddy on December 25, 1962. That settlement deed was agreed to and ratified by the parties under the compromise. The effect of this is that D. S. Reddy and his wife got six acres of land only under the settlement deed of December 25, 1962, which is within two years before the death of Krishna Reddy. Therefore, in the light of the terms of the compromise, only one conclusion is possible and that is that the six acres of land which was given to D. S. Reddy and his wife came within the scope of section 9 of the Estate Duty Act and this land is liable to be included in the estate of Krishna Reddy for the purpose of levy of estate duty. At this juncture, we may take note of a contention of Sri Dasaratharama Reddy appearing for the accountable person. In his submissio....

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....e of the balance of ten acres. That was covered by the sale deed dated September 11, 1954, executed in favour of Seetharamamma by Krishna Reddy. The second term of the compromise specifically states that Seetharamamma shall be entitled to items 1, 2 and 3 in accordance with the sale deed dated September 11, 1954. The memorandum of compromise goes a step further and says that the settlement deed executed by Krishna Reddy on December 1, 1962, in favour of D. S. Reddy and his wife was cancelled. That means the parties agreed to the affirmation of the sale deed dated September 11, 1954, executed in favour of Seetharamamma. This conclusion is further fortified by another provision, namely, that out of ten acres of land which Seetharamamma got under the said sale deed, she should relinquish two acres in favour of D. S. Reddy and his wife. That would mean that while confirming the sale deed dated September 11, 1954, the parties agreed that Seetharamamma should give up her rights in two acres. That can be tantamount only to a gift by Seetharamamma in favour of D. S. Reddy and his wife. Gift-tax was already levied and collected on this portion of the property also. What clearly emerges from....