S.N. Dwivedi, J. - (1.) THERE was one S. H. Chawla. He died on July 20, 1958. He left behind a son, O. S. Chawla, and a wife, Sushila Chawla. For the purposes of assessment of estate duty the son is the accountable person. He filed an account of the property passing on the death of his father. The list of property did not include shares of the value of Rs. 77,238. The names of the companies which had issued the shares are not disclosed in the statement of the case. But, that is of no moment. It should, however, be noted that the share scrips were in the name of Sushila Chawla, the wife. The Assistant Controller of Estate Duty included the value of the shares in the principal value of the estate of the deceased. His order was affirmed on appeal by the Appellate Tribunal. Under Section 64(1) of the Estate Duty Act (hereinafter called " the Act"), the Appellate Tribunal has referred for opinion of the court this question : "Whether, on the facts and in the circumstances of the case, the inclusion of the sum of Rs. 77,238 on account of the value of shares held by the deceased in the name of his wife, in the principle value of the estate passing on his death, is justified in law ? "
(2.) THE contention of the accountable person before the Appellate Tribunal was that the shares belonged to Sushila Chawla. It was conceded by him that the money for purchasing the shares came from the pocket of the deceased. THE Appellate Tribunal recorded these findings : (1) THE income from the shares was being shown as the income of the deceased in the income-tax assessment. (2) THE dividends were being credited to the bank account of the deceased. (3) THE income from the shares was not included in the income-tax assessments of the deceased under Section 16(3) of the Income-tax Act. (4) In the course of assessments of income-tax for 1955-56 and 1956-57 the deceased did claim that the dividend of the shares belonged to his wife but the claim was not upheld as there was no evidence in support of it. (5) THE accountable person could not show that the dividend was ever paid by the deceased to his wife. On those findings and the concession the Appellate Tribunal held that the shares did not belong to Sushila Chawla. The true legal effect of the findings of the Appellate Tribunal is this: She held the shares benami for the benefit of the deceased. She was the benamidar of the deceased. We have to answer the question referred to the court on the basis of this legal position. What is the nature of a benami transaction? The person who is the benamidar has nominal title to the property; the person who purchases the property in the name of the benamidar has the real title to the property. The law imposes an obligation in the nature of trust on the benamidar (see the Trusts Act, Section 82). He is a constructive trustee. He holds the property for the benefit of the person who has the real title to it (see Gopeekrist Gosain v. Gungapersaud Gosain, 1854 6 MIA 53). When a transaction of purchase is proved to be benami, courts give effect to the real title, and not to the nominal title. There are four exceptions to this rule, but they are not material in this case. If a creditor of the person who has the real title has obtained a decree for money against that person, he may execute the decree by attachment and sale of the property held as benamidar in the name of a third person. (See Musadee Mahomed Cazum Sherazee v. Meerza Ally Mahomed Shoostry, 1854] 6 M.I.A. 27 (P.C.), Abdul Hye v. Mir Mahommed Mozaffar Hossein, 1884 10 ILR(ILR(Cal)) 616 PC). It would thus appear that in the present case the deceased had the real title to the shares ; Sushila Chawla has merely nominal title to them. So the deceased was the owner of the substance of the property; Sushila Chawla held the mere husk.
(3.) SECTION 5(1) of the Act is the charging provision. It imposes estate duty on the value of property which " passes on the death " of a person. SECTION 2(16) defines "property passing on the death" of a person. It includes property passing immediately on death. The word " pass " in the two sections means, we think, " changes hands ". (See Controller of Estate Duty v. Smt. Usha Devi, 1970 76 ITR 347 M.P. and State Bank of India v. Controller of Estate Duty, [1968]69 I.T.R. 270, 277 (Punj.)). Ordinarily properties owned by a person pass on his death. So the shares in which the deceased had the real title passed on his death, and their value is taxable to estate duty under SECTION 5(1). The argument of the accountable person is that as the share-scrips were in the name of Sushila Chawla, the deceased alone was not competent to dispose of the shares. Accordingly, the shares would not be deemed to pass. An attempt is made to inject vitality in the argument with the aid of Section 6. But, in our view, Section 6 will not apply to the case.;