Ramaswami, J. - (1.) This appeal is brought, by certificate, on behalf of the Controller of Estate Duty, Gujarat, from the judgment of the High Court of Gujarat dated February 19, 1964, in Estate Duty Reference No. 1 of 1962.
(2.) The late Nawab of Palanpur, H. H. Taley Mohomed Khan (hereinafter referred to as the "deceased"), the father of the respondent, died on May 17, 1957. The deceased was the owner of a palace known as "Jorawar Palace". In the year 1954, the deceased sold the palace to the Government of Bombay for a sum of Rs. 15,00,000. In January, 1955 the possession of this palace was handed over to the Government of Bombay. A sum of Rs. 5,00,000 was paid by the Government of Bombay to the deceased immediately on taking over possession and the balance of Rs. 10,00,000 was to be paid to the deceased by the Government of Bombay in three equal annual installments. The respondent, who is the son of the deceased and the accountable person of the estate, contended before the Deputy Controller of Estate Duty that, out of the aforesaid sum of Rs. 10,00,000 due from the Government of Bombay, a sum of Rs. 9,00,000 was gifted to him by the deceased on May 3, 1955, and, therefore, the amount should not be included in the estate of the deceased. In support of this claim, the respondent produced before the Deputy Controller a photostat copy of a letter dated May 3, 1955, addressed by the deceased to the respondent. The Deputy Controller rejected the contention of the respondent, holding that the letter dated May 3, 1955, did not amount to a transfer of an actionable claim but that the gift was legally completed only on September 19, 1955, when the deceased intimated to the Government of Bombay his intention to make the gift to the respondent. The Deputy Controller accordingly held that the amount of Rs. 9,00,000 must be deemed to have passed to the respondent on the death of the deceased under section 9 of the Estate Duty Act, 1953, and as the gift was made within two years of the death of the deceased, it was chargeable to estate duty. The respondent took the matter in appeal to the Central Board of Revenue and it was contended on his behalf that the gift was governed by the Mohammadan law and section 120 of the Transfer of Property Act was not applicable and as the gift was made two years or more before the death of the deceased, it was not chargeable to estate duty. Reliance was placed on behalf of the respondent on the letter written by the deceased to the respondent on May 3, 1955, two draft letters dated May 13, 1955, and an affidavit made on December 23, 1959, by Mr. Thacker, a partner of Messrs. Mulla & Mulla, who, in May, 1955, were acting as solicitors for the deceased. The draft letter, under which instructions were given to the Government of Bombay to pay the sum of Rs. 9,00,000 our of the unpaid balance of Rs. 10,00,000 directly to the respondent, was not signed on May 13, 1955, but was signed by the deceased on September 19, 1955, and sent to the Chief Minister thereafter. In view of the instructions contained in that letter, the amount of Rs. 9,00,000 was, in fact, paid to the respondent directly by the Government of Bombay. By its order dated January 27, 1960, the Central Board of Revenue held that the provisions of section 130 of the Transfer of Property Act applied to the case, that the letter dated May 3, 1955, did not complete the gift but there was a complete gift only on September 19, 1955, when the deceased signed the latter addressed to the Government of Bombay informing the Government of the gift to the respondent. The Central Board of Revenue accordingly held that there was no valid transfer of the sum of Rs. 9,00,000 prior to September 19, 1955, and confirmed the inclusion of that amount in the estate of the deceased. Under section 64(1) of the Estate Durt Act, 1953 (34 of 1953), the Central Board of Revenue stated a case for the opinion of the High Court on the following question of law : "Whether, on the facts and in the circumstances of the case, the gift of Rs. 9,00,000 should be regarded as having been made within two years of the death of the deceased and liable to estate duty -
(3.) At the hearing of the reference it was conceded on behalf of the respondent that section 130 of the Transfer of Property Act was applicable to the case but it was argued that the provisions of that section had been complied with, that the letter of the deceased dated May 3, 1955, itself effected the gift and the amount of Rs. 9,00,000 was not liable to be included in the estate of the deceased for the purpose of estate duty. The High Court held that the provisions of section 130 of the Transfer of Property Act applied to the case and the letter dated May 3, 1955, manifested clearly the intention of the deceased to make the gift of Rs. 9,00,000 to the respondent and that intention was sought to be carried out and effected by that letter. The High Court accordingly answered the question in favour of the respondent.;