Singh, J. -
(1.) THIS is a case stated by the Appellate Tribunal under Section 64 (1) of the Estate Duty Act, 1953 referring for our answer the following questions of law:
"(1) Whether on the facts and in the circumstances of the case, the Muafi grant held by the deceased Sardar Narayan Rao Patankar was property within the meaning of Section 2 (15) of the Act?
(2) Whether on the facts and in the circumstances of the case, the Muafi grant was held by the deceased Narayan Rao Patankar for his life only?
(3) Whether on the facts and in the circumstances of the case, the Muafi grant held by the deceased Narayan Rao Patankar passed on his death within the meaning of Section 5 (1)?"
(2.) SARDAR Narayan Rao Patankar, who died on 13th October, 1957, was holder of a cash Muafi of Rs. 38,844/- per annum from the Gwalior Darbar. On his death the grant of Muafi was continued by the Madhya Pradesh Government in favour of his son Trimbak Rao Alias Aditya Patankar and the name of the son under the guardianship of his mother Smt. Usha Devi Patankar was substituted in place of the deceased. Smt. Usha Devi Patankar is the accountable person in this case.
In assessment proceedings of the Estate Duty on the property passing on the death of Narayan Rao, it was claimed by the accountable person that Muafi was not a property which passed on the death of the deceased and as such the property was not liable to Estate Duty under Section 5 of the Act. This contention was overruled by the Assistant Controller of Estate Duty who valued the Muafi at Rs. 7,76,880/-. In an appeal preferred by the accountable person, the Appellate Controller of Estate Duty held that the Muafi grant was hereditary grant and that it was liable to Estate Duty He, however, reduced the valuation fixed by the Assistant Controller of Estate Duty and fixed the same at Rs. 4 lacs. The accountable person then preferred an appeal before the Tribunal. The Tribunal allowed the appeal. It held that the cash Muafi was not heritable, that it was in the nature of a cash jagir operative for the life time of the holder, though usually continued in favour of the successor, and that the Muafi held by Narayan Rao did not pass on his death within the meaning of Section 5 (1) of the Act and was not lible to Estate Duty. On an application made by the Controller of Estate Duty, the Tribunal has referred to us the questions of law that we have already set out.
The original Sanad of this grant is not traceable. From the History Jagirdaran, which appears to be a publication under the authority of the Government of the erstwhile Gwalior State, and a translation of which has been included as a part of the statement of the case, it appears that the ancestor of the Patankar family, Shri Rao Saheb Mansingh was a Sardar of Kolhapur and Hyderabad States, His son Ramchandra Rao was married to the daughter of Maharaja Daulatrao Shinde of Gwalior. At the time of the marriage, there was an agreement for payment of some cash and grant of jagir. Thereafter, Maharaja Daulatrao granted to Mansingh Rao 'Mahal Pavagan' in jagir; subsequently the jagir was taken back and cash money used to be paid to him by way of maintenance. Shri Ramchandra Rao used to live with his mother-in-law Smt. Bayjabai, who was the mother of Maharaja Jiwaji Rao Scindia. After the death of Ramchandra Rao, Trimbak Rao Patankar succeeded to him as an adopted son. A grant made to him by Maharaja Jiwaji Rao is on the record. It recites that a sum of Rs. 10,000/- per month was paid in the past by Smt. Bayjabai for maintenance and now Trimbak Rao will get a sum of Rs. 5,000/- per month from the Darbar. After the death of Trimbak Rao, his son Narayan Rao, the deceased, was granted a cash Muafi of Rs. 38,844/- per annum. His name was mutated in place of his father. The order of His Highness the Maharaja Scindia of Gwalior passed in this connection and communicated by the Muntazim Jagirdaran, Gwalior State to Narayan Rao reads as follows:
"It is with the greatest pleasure that I write to inform you that His Highness the Maharaja Scindia has been graciously pleased to sanction the mutation of your name in place of your father, the late Sardar Trimbak Rao Sahib Patankar and to command that you shall be paid the cash Muafi of Rupees 38,844/-per annum. In this connection please note that you shall receive the robe of honour of this mutation on the occasion of the ensuing Vijayadashi Durbar which will be held on the 25th October, 1947. You are therefore hereby directed to take the trouble to presenting yourself at the Durbar for the investiture stated above."
After the death of Narayan Rao in 1957, as already stated, the Government of Madhya Pradesh allowed the substitution of the name of his son in place of the deceased and the Muafi has been continued in favour of the son. The order of the Government reads as follows:
"With reference to your letter No. 13 dated 28-10-57 on the subject cited above, you are hereby informed that the Government of Madhya Pradesh has been pleased to grant substitution of Shri Trimbakrao alias Aditya Patankar under your guardianship for the aforesaid cash muafi."
(3.) THE charging section in the Estate Duty Act for levy of Estate Duty is Section 5 (1) which reads as under:
"5 (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 1st November, 1956, were comprised in the States specified in the First Schedule to this Act, which passes on the death of such person, a duty called "Estate Duty" at the rates fixed in accordance with Section 35."
Briefly stated the questions to be considered in this reference are whether the Muafi held by the deceased Naravan Rao was property, what was the nature of that property and whether it passed on his death within the meaning of Section 5 (1) of the Act.;