A.D.V. Reddy, J. -
(1.) AMONG the numerous and variety of private and publics trust created by late Nawab Mir Sir Osman AH Khan Bahadur, the ex-Nizam of Hyderabad, was one named " The H. E. H. the Nizam's Family Pocket Money Trust" meant to provide for certain expenses of his wives, children, grand-children, etc. whereunder 55 lakhs of rupees in the shape of Government securities were settled as trust to be divided notionally into 50 equal units, out of which groups of units were allocated to different members of the family regarding which provisions were made in the trust deed, dated December 29, 1950. We are now concerned with 20 such units which were allotted for the benefit of one Amina Marzia, second daughter of the settlor's second son, Prince Muazzam Jah Bahadur. The relevant portion of Clause 8(a) of the trust deed, dealing with this part of the settlement, reads as follows :
" (a) to hold the 20 (twenty) equal units of the corpus of the trust fund allocated to Dulhan Pasha Begum, wife of the settlor upon trust to accumulate the income thereof during the lifetime of the said Dulhan Pasha Begum and if the trustees so think fit to apply, pay or spend from time to time out of the accumulations of such income such sums as they in their discretion may from time to time think fit for the purchase of a suitable house for Amina Marzia the second daughter of the settlor's second son Prince Muazzam Jah Bahadur or on the occasion of her marriage or for such other proper or necessary expenses of the said Amina Marzia as the trustees may think proper and on and after the death of the said Dulhan Pasha Begum to apply, pay or spend the income of the said 20 equal units of the corpus of the trust fund to the said Amina Marzia for and during the term of her natural life and on and after the death of the said Amina Marzia to divide, hand over and transfer the said 20 equal units of the corpus of the trust fund together with the accumulations of the income thereof (if any) and the investments thereof then in the hands of the trustees amongst and to the children and/or remoter issue then surviving of the said Amina Marzia in accordance with the provisions of the Mahomedan law of inheritance as if the said Amina had died intestate, etc......."
(2.) THE rest of the provisions relate to the devolution of the properties in case of certain contingencies with which we are not now concerned as, they are not relevant for our purpose.
On the 'death of Dulhan Pasha Begum, wife of the settlor, on February 15, 1955, the Deputy Controller of Estate Duty subjected the twenty (20) units of the entire trust money with the accumulated income thereon totalling up to Rs. 2,10,807, to estate duty/on the ground that the 'entire estate passed to the accountable persons, viz., the trustees. On appeal, the Appellate Controller of Estate Duty confirmed the same, and on further appeal to the Appellate Tribunal, it held that no property passed on the death of. Dulhan Pasha Begum and cancelled the assessment. Hence the reference for the determination of the question:
" Whether, on the facts and in the circumstances of the case, and on a proper interpretation of Clause 8(a) of the deed of H. E. H. the Nizam's Pocket Money Trust, the value of the corpus of 20 units allotted to the deceased and the accumulations of income therefrom passed on the death of the deceased ?"
It is evident from the trust deed that Dulhan Pasha Begum, the wife of the settlor, derived no interest either in the corpus, or the income of the trust property. The actual beneficiary under the trust deed is Amina Marzia, the daughter of the settlor's second son, Prince Muazzam Jha Bahadur. Her beneficial interest under the trust is regulated in relation to the life of Dulhan Pasha Begum. Therefore, it has to be seen how far the death of Dulhan Pasha Begum attracts the levy of estate duty.
(3.) SECTION 5 of the Estate Duty Act is the charging section, under which duty has to be levied on property, settled or not settled, which passes on the death of a person. The Estate Duty Act is modelled on the U. K. Finance Act, 1894, and SECTION 5 of the Estate Duty Act is almost in similar terms as SECTION 1 of that Act. The expression " passes on the death " has not been defined in either of the Acts. But it has been subjected to judicial interpretation ever since the passing of the Finance Act. The simplest meaning of the term is the " passing of the property or the estate devolving on the death of a person ". But, the " passing of property " is not limited to devolution on the death of a person to whom the property belongs. It may also pass on the death of a party to whom the property does not belong as is indicated in SECTION 34(3) of the Estate Duty Act.
In Attorney-General v. Milne, 1914 A.C. 765, 779 ; 2 E.D.C. 8 (H.L.) Lord Parker of Waddington stated that it denotes some actual change in the title or possession of the property as a whole which takes place at the death. Later, Viscount Haldane L. C. in Neville v. Inland Revenue Commissioners,  A.C. 385, 389 ; 2 E.D.C. 219 (H.L.). stated that the word "passes" may be taken as meaning " changes hands ". Subsequently, in Scott v. Inland Revenue Commissioners,  A.C. 174 ; 2 E.D.C. 579 (H.L.) Lord Russell of Killowen held that in order to constitute a passing of property on death within the meaning of Section 1 of the U. K. Finance Act, 1894, there must be a passing beneficially from some person or persons to another person or persons, though, in that case, the accountable person there was held finally responsible as the entire estate had passed to him, on the ground that, on the death, the trust that began was different from the one that ended. As observed by Lord Radcliffe in Public Trustee v. Inland Revenue Commissioners, 1960 A.C. 398 ;  1 All E.R. 1, II ;  43 I.T.R. (E.D.) 19 (H.L.). the passing of property is equivalent to changing hands in enjoyment and in order to arrive at a correct decision on the question as to when the property passes, we must focus our attention on a comparison between the persons beneficially interested in the fund the moment before the death, and the persons so interested the moment after the death; and if after such comparison it appears that the beneficial possession or enjoyment of the property or a definable part thereof is in substance and effect unaffected by the death, the property or that part of it cannot be said to have passed on death even if, as a matter of terminology, one set of limitations has ceased to have effect and another has become operative or the beneficiary was entitled to capital thereafter ; that if the same person remains in beneficial possession or enjoyment of the property both before and after death without interruption, there is no passing of property even if there is change of source or title.;