T.P. Mukerjee, J. - (1.) THIS is a reference by the Board of Revenue under Section 64(1) of the Estate Duty Act, 1953, hereinafter referred to as " the Act", on the following question of law : "Whether, on the facts and in the circumstances of the case, the share in the two properties known as Burlington Hotel and Hakman's Hotel, taken by the applicant under the decree dated the 1st September, 1950, of the Civil Judge, Lucknow, was correctly treated as property deemed to pass on the death of the deceased ?"
(2.) THE material facts giving rise to this referrence are as follows : THE two hotels, hereinafter referred to as the said property, belonged to late Sri Razzak Mohammad (hereinafter referred to as "the deceased"), who died on July 26, 1956. Before his death the deceased had executed a deed of transfer in respect of the said property conveying the same to his son, Sri Sultan Mohammad, by a registered instrument dated September 11, 1936. By this deed he transferred the whole of the said property to Sri Sultan Mohammad, his son, "inconsideration of his services, obedience and love and affection and in further consideration of a sum of Rs. 10,000 per year till my lifetime." Sultan Mohammed died issueless in the year 1948, leaving behind him his widow, Smt. Sarvari Kahtoon, referred to hereinafter as "the applicant". After the death of Sultan Mohammad there was litigation between the applicant and the deceased for partition and separate possession of their respective shares in the property of the late Sri Sultan Mohammed. There was a preliminary decree of the civil court in the partition suit of September 1, 1950, a copy of which appears in the paper book as annexure "C" By this decree the claim of the applicant for one-fourth share in the said property was decreed and it was also declared that the share of Sri Razzak Mohammad, the deceased, would be 3/4th in the said property. It was further declared that the maintenance allowance of Rs. 2,500 for Sri Razzak Mohammed, the deceased, would be a charge on the share of the said property allotted to the applicant. As already stated, Razzak Mohammad died on July 26, 1956. Thereafter, assessment of the estate left by the deceased was taken up by the Assistant Controller, Estate Duty, Lucknow. The Assistant Controller, Estate Duty, Lucknow, estimated the total value of the said property at Rs. 5,75,000. He held that as the deceased had reserved the benefit to himself in the shape of annuity of Rs. 10,000 per annum for the period of his life, the transfer of the said property amounted to a gift covered by the provisions of Section 7 of the Act. He further held that the fact that the donee had pre-deceased the doner would not affect the liability which would pass on to the legal heir of the donee, namely, the applicant. He, therefore, considered the applicant as an accountable person liable for duty on her 1/4th share in the said property. Accordingly, the Assistant Controller, Estate Duty, issued a notice of demand to her for payment of the sum of Rs. 19,396,54 as the proportionate amount of duty payable by her on her share of the said property.
(3.) THE applicant preferred an appeal to the Board of Revenue under Section 63 of the Act, against the order of the Assistant Controller, Estate Duty, Lucknow, in which it was contended, inter alia, that she should not be treated as an accountable person as no property passed to her on the death of the deceased. THE Board held that as the deceased had reserved the benefit to himself while making the transfer of the said properties in 1936, the provisions of Section 10 of the Act came into operation and the same would be deemed to pass on his death. THE Board observed that inasmuch as l/4th share in the said property devolved on the applicant as a legal heir of the original donee she must be considered as an accountable person for the portion of her property. THE Board, therefore, affirmed the assessment and dismissed the appeal. The Board has now made the reference at the instance of the applicant on the question referred to above.;