Pathak, J. - (1.) THE Appellate Tribunal has referred the following question under Section 64(1) of the Estate Duty Act, 1953 : " Whether, on the facts and in the circumstances of the case, the estate duty was rightly levied in respect of the house property at No. 12, Elgin Road, Allahabad, as property passing on the death of the deceased ? "
(2.) THE immovable property known as 12, Elgin Road, Allahabad, is Nazul land. It was first leased out of one E. E. Moreau by the Secretary of State for India in 1858, for a period of 50 years on terms with gave the lessee an option of renewal of the lease. THE lease expired in 1908. THEreafter, by a deed of 1911 it was renewed with effect from 1908 for a further period of 50 years. THEre was no provision for any further renewal and the lease expired on November 29, 1958. Dr. Mohammad Waliullah became the owner of the lease-hold rights in the land and of the bungalow standing thereon some years before the lease expired in 1958. On March 29, 1958, the Collector of Allahabad, on behalf of the State Government, the successor to the right and interest of the then lessor, the Secretary of State for India, served a notice requesting him under the terms of the lease to surrender the land and hand over vacant possession upon the expiry of the lease. Dr. Waliullah applied for the grant of a fresh lease in respect of the property. On December 14, 1959, the Collector wrote to him that on payment of a premium of Rs, 30,169.46 and ground rent of Rs. 588'94 per annum a lease for 30 years with effect from November 30, 1958 in the first instance, renewable for two terms of 30 years each, subject to an enhancement of rent not exceeding 50 per cent, on each renewal, would be granted. It seems that the parties entered into negotiations as regards the final terms of the proposed lease, but before any decision could be taken Dr. Waliullah died on February 21, 1960. On October 31, 1960, the Collector wrote to his widow informing her that upon representations made by the lease-holders of the civil station, Allahabad, the Government had decided as a special" concession to reduce the rates of premium and rent provided the concession was availed of by the execution of a fresh lease within three months. The total premium now payable, in respect of the property was specified as Rs. 23,459.50 and the ground rent as Rs. 295.48 per annum. The period of the leare and the terms of renewal remained the same. On September 12, 1962, the Collector wrote to Mrs. Waliullah for payment of the premium and rent to enable the grant of a fresh lease and warned that in case payment was not made within a month it would be presumed that she was not desirous of obtaining a fresh lease. On October 19, 1962, she replied that her husband had left six heirs, that the fresh lease had to be executed in favour of all, that the amount of premium and annual rent should be reduced and that pending final decision permission should be granted to pay the premium in five annual instalments. Thereafter, on November 15, 1962, the Collector wrote to Mrs. Waliullah and the other heirs according permission for payment of premium in five equal annual instalments and agreed to execute a fresh lease in favour of all the heirs after the enquiry. From the statement of the case it appears that while negotiations regarding the amount of the premium and ground rent under the proposed lease were in progress, the deceased continued in occupation and the Collector continued to accept ground rent from him, and after his death from his heirs.
(3.) ARSHAD Waliullah, one of the sons of the deceased, filed a return of the estate. The return did not include the property at 12 Elgin Road, Allahabad. The return was adopted by the widow as having been filed on her behalf also. The Assistant Controller valued the property at Rs. 71,452. The cost of construction of the buildings and the cost of the land was taken and from the aggregate an amount of Rs. 30,169 was deducted on account of the premium. The accountable person appealed to the Assistant Controller and the appeal being dismissed, he filed a second appeal before the Appellate Tribunal and that appeal has also been dismissed. And now, at the instance of the accountable person, this reference has been made. Before the Appellate Tribunal the principal contention of the accountable person was that the lease having expired in 1958 there was no interest in the property left to the deceased which he was competent to dispose of. The Appellate Tribunal observed : "The most significant facts are that though the lease expired on November 29, 1958, the deceased did not vacate the lease-hold premises; that negotiations for the grant of a fresh lease were going on between the deceased and the Collector; that the Collector accepted the ground rent from the deceased and after his death from the legal heirs of the deceased; that the Collector actually agreed to grant a fresh lease for a period of 30 years in the first instance if the deceased was prepared to pay a total premium of Rs. 30,169 and ground rent of Rs. 588 per annum ; that the deceased never vacated the premises and that the Collector also did not take any steps to oust the deceased from the lease-hold premises and that subsequently the Collector agreed to renew the lease in favour of the legal representatives of the deceased at a reduced premium and reduced ground rent." ;