HEGDE, J. - (1.) BOTH these appeals, by special leave arise from the judgment of the High Court of Madras in a Reference under S. 64 (1) of the Estate Duty Act, 1953 (to be hereinafter referred to as the Act).
(2.) THE question of law referred in that case is : "Whether, on the facts and in the circumstances of the case, the properties settled by the deceased by the six deeds of settlement (two of them dated 26th June, 1951 and four of them dated 30th June 1951) valued at Rs. 7,38,656/- or any part thereof was not liable for inclusion in the estate of the deceased as property deemed to pass on his death." The High Court answered that question partly in favour of the Revenue and partly in favour of the assessee. It opined that the value of the property gifted in favour of the wife of the deceased is not to be taken into consideration in computing the value of the property that passed on the death of the deceased. In respect of the properties gifted to the sons, grandsons and the daughter of the deceased only the annual payments that had to be made to the deceased as well as his right to maintenance should be valued for the purpose of determining the extent of the right that passed on his death. The facts of the case material for the purpose of deciding the question of law formulated above, as could be gathered from the case stated are as follows : One Ratnasabapathy Pillai was the owner of the properties with which we are concerned in this case. He died on February 5, 1959 leaving behind him his four sons, some grandsons wife and daughter who are the accountable persons. They furnished an account of the properties passing on the death of the deceased to the Deputy Controller of Estate Duty, Madras who was the assessing authority. The Deputy Controller did not accept the correctness of the return made by them. He added to the return made, the value of the following properties settled by the deceased on his wife, sons, grandsons and daughter. JUDGEMENT_169_4_1973Html1.htm
(3.) BY the deeds in question the deceased settled the properties in favour of the beneficiaries absolutely and with full power of alienation. The deeds in favour of his sons and the minor grandsons contained a provision as under : "You have to pay me during my lifetime a sum of Rs. 1000/- per year for my domestic expenses." The deed in favour of the daughter contained a provision": "You have to maintain myself and my wife during our lifetime." The deed in favour of the wife contained the following words : "In the hope that you will support me during my lifetime, I do hereby settle... ...." The Deputy Controller held that the deceased had reserved to himself an interest for life in the properties comprised in the above settlements, within the meaning of S. 12 of the Act. He accordingly included the value of those properties for the purpose of determining the value of the properties that passed on the death of the deceased. The accountable persons appealed to the Central Board of Direct Taxes, New Delhi. They contended before the Board that the conditions or stipulations contained in the deeds of settlement in favour of the sons, minor grandsons and daughter merely amounted to an expression of a desire and hence could not be interpreted as a reservation within the meaning of S. 12 as those conditions or stipulations did not detract from the absolute character of the settlements. With regard to the settlement made in favour of the wife, it was argued before the Board that the deceased had expressed only a hope that his wife would support him and maintain him during his life time, and the words used in the deed were vague and unenforceable in law as a stipulation. The Board rejected these contentions. It opined that the main point in issue in the case was whether an interest in the property was reserved by the deceased. It held that all the settlements fell within the scope of S. 12 or at any rate it came within S. 10 of the Act. Thereafter at the instance of the accountable persons, the question set out earlier was referred to the High Court.;