SENGUPTA,J. - (1.) THIS reference under s. 64 (1) of the ED Act, 1953 ('the Act') has been made by the Tribunal at the instance of the Revenue.
(2.) BRIEFLY stated, the facts are that the deceased who died on 30th Aug., 1974 was the owner of a house property at 73A, Ganesh Chandra Avenue, Calcutta. In respect of this property, he had executed a settlement deed on 27th March, 1953 in which he had declared that the top floor in the six stored building or fifth floor should not be given on tenancy and should be reserved for the residence of his wife, two sons and unmarried daughter. According to the Asstt. CED, the deceased himself used to reside in the said premises free of rent with his family members and expired there. He was also maintaining his Chamber for practice in the ground floor. Further, the deed was executed before the enactment of Act. Therefore, s. 12 of the Act came into operation. The Asstt. CED discussed the provisions of that section at length and also referring to Chamber's Twentieth Century Dictionary for the purpose of explaining the word 'residence', he was of the opinion that the value of the entire settled property was includible in his net principal value. The assessee opposed the view taken by the Asstt. CED and filed a letter on 15th July, 1977. It was contended that the trust created by the settlor had, extinguished in 1964 and referred to-CED vs. R. Kanakasabai 1973 CTR (SC) 227 : (1973) 89 ITR 251 (SC) for the proposition that the value of the settled property should not be included in the principal value. The Asstt. CED, however, rejected the contention of the assessee with the following observations: " (a) The fact of the case of R. Kanakasabai is quite different from that of present case. There the testator expressed his pious wish that the beneficiaries should pay a certain amount per annum for his maintenance and livelihood due to old age of the testator. Here there was no such thing in the deed itself. On the contrary, the testator without mentioning or reserving right of residence and chamber space in the settled property, in fact, resided in the property till his death and maintained his chamber as place of profit in the said premises. (b) In fact, in my opinion, s. 12 would apply if there be a reservation of interest (however small it may be) in the settled property. The reservation may be expressed or implied but it would be of an interest in the property which is subject-matter of settlement. (c) The extinguishment of trust in 1964 as alleged on the attainment of 21 years of Sri Samar De will not put an end to this matter because the testator even before and after 1964 maintained a chamber and practised from the ground floor room of the said premises and by the word 'implication' in the section he got himself entangled in the matter."
(3.) AGGRIEVED , the assessee went up in appeal before the CED (A) . The CED (A) referred to the Gujarat High Court decision in the case of Kikabhai Samsuddin vs. CED (1969) 73 ITR 241 (Guj) and held that the benefit reserved was not referable to any specified part or portion of the property but the entire property was subject to a charge for the payment of the sums to the deceased's wife and unmarried daughter and, thus, the property would pass under s. 10 of the Act and not under s.12 as held by the Asstt. CED. The CED (A) further held that the case of R. Kanakasabai vs. CED (1969) 74 ITR 429 (Mad) and others is different from the facts of the present case. In that case the Supreme Court has held that the property does not pass under s. 10 as the benefit to the donor by contract or otherwise is not referable to the gifted property and the provision for annual payment and maintenance was not charged on the property settled. In the present case, the provision for payment to the wife and the unmarried daughter has been made a charge on the gifted properties and, therefore, even according to the Supreme Court decision in the case of R. Kanakasabai (supra) , the properties would pass under s. 10.;