Controller of Estates Duty, Andhra
Pradesh Hyderabad Vs. Kancharla Kesava Rao  INSC 72 (4 April 1973)
KHANNA, HANS RAJ
CITATION: 1973 AIR 2484 1973 SCR (3) 897 1973
SCC (2) 384
RF 1976 SC1935 (14,26)
Estate Duty Act, 1953, Ss. 7 and
24--Partition-Allotment to widow of member of a Hindu undivided family property
for life time in lieu of her share-If liable to estate duty on her death.
A partition was effected among the members of
a Hindu undivided family by a registered partition deed. Under that deed, the
widow of one of the members, who had a tight to inherit her husband's share in
the non-agricultural properties as well as the, right to be maintained from out
of the family income, gave up those rights, and in lieu thereof, the other
members of the family allotted to her share 25 acres of land to be enjoyed by
her during her life time. On her death, her interest in the land ceased and
passed on to the other members of the former joint family as provided in the
partition deed. Therefore, the authorities under the Estate Duty Act, 1953,
proceeded to levy estate duty under s. 7 of the Act on the property allotted to
her. On the question whether the arrangement in the partition dead could be
considered a 'disposition' within the meaning of s. 24 of the Act, and
therefore the value of the land allotted was exempt from estate duty, the High
Court, on reference, held in favour of the assessee.
Allowing the appeal to this Court,
HELD : A partition of a Hindu undivided
family is a mere adjustment of rights. It cannot be considered to be a transfer
and therefore, cannot be a disposition within the meaning of s. 24 of the Act.
Hence, the case fell under s. 7 of the Act. [900C] Commissioner of Income-tax,
Gujarat v. Keshevlal Lallubhai Patel, 55 I.T.R. 637 and Commissioner of Gift
Tax, Madras V. N. S. Getti Chettiar, 82 I.T.R. 599; 605, followed.
CIVIL APPELLATE. JURISDICTION: Civil Appeal
No. 107 of 1970.
Appeal by certificate from the judgment and
order dated December 24, 1968 of the Andhra Pradesh High Court at Hyderabad in
Case Referred No. 28 of 1965.
G. C. Sharma, S. P. Nayar and R. N. Sachthey,
for the appellant.
G. S. Rama Rao, for the respondent.
The Judgment of the Court was delivered
HEGDE, J.-This is an appeal by certificate. It is directed against the decision
of the Andhra Pradesh High Court in a reference under section 64(1) of the
Estate Duty Act, 1953 (to 898 be hereinafter referred to as the 'Act'). The
question of law referred to the High Court was :
"Whether the value of 25 acres of wet
land is exempt from levy of estate duty under section 24 of Estate Duty Act, 1953
?" The material facts of the case, as can be gathered from the case stated
are these One Venkataramayya died in April, 1940 leaving behind him his widow
and two sons, who constituted a Hindu undivided family. One of his sons,
namely, Chandrasekhara Rao died in the year 1941, leaving behind him six minor
sons and a widow. Subsequently, a partition.was effected between the members of
the family on 16-6-1943 by a registered partition deed. Under that deed
Kotamma, the widow of Venkataramayya, who had a right to inherit her husband's
share in the non- agricultural properties as well as the right to be maintained
from out of the family income, gave up her right both in the non-agricultural
properties, except the right to reside in a portion of the family house as well
as her right to be maintained out of the family income. At the same time the
other members of the family allotted to her 25 acres of wet land, which she was
to enjoy during her lifetime and the same was to devolve after her death on the
other members of the former family as per the stipulations in the partition
deed. She was not entitled to alienate the property allotted to her share.
Kotamma died on April 9, 1958. The authorities under the 'Act' proceeded to
levy estate duty on the value of the property allotted to Kotamma under the
partition deed dated 16-6-1943 under section 7 of the Act.
The accountable persons contended that the
estate in question is not liable to pay estate duty as it came within the scope
of section 24 of the Act. The departmental authorities, including,, the
Tribunal,, rejected that contention Thereafter, at the instance of the Revenue,
the question set out above was referred to the High Court. The High Court has
answered that question in the affirmative and in favour of the assessee. The
Revenue has come up in appeal to this Court. The only question for
consideration is whether the facts of the present case fall within the scope of
section 24 of the Act.
Section 7(1) of the Act says "7(1)
Interests ceasing on death.-Subject to the provisions of this section, property
in which the deceased or any other person had an interest ceasing on the death
of the deceased shall be deemed to pass on the deceased's death to the extent
to which a benefit accrues or arises by the cesser of such interest, including,
in particular, a coparcenary interest in the joint family property of a 899
Hindu family governed by the Mitakshara, Marumakkattayam or Aliyasantana
law." The remaining portions of that section are not relevant for our
There is no dispute that when Kotamma died
her interest in the wet land ceased and that it passed on to the other members
of the former joint family as provided in the partition deed. Hence prima-facie
the present case comes under section 7 of the Act. Only question is whether the
arrangement made under the partition deed can be considered as 'disposition' within
the meaning of that expression in Section 24 of the Act. Now let us turn to,
That section reads:
"24(1) Property 'reverting to
disponer.--Where 'by a disposition of any property an interest is conferred on
any person Other than the disponer for the life of such person or determinable
on his death, the remainder being conferred upon the disponer absolutely, and
such person enters into possession of the interest and thenceforward retains
possession of it, then, on the death of such person, the property shall not be
deemed to pass by reason only of its reverter to the disponer in his
lifetime." The remaining portion of this section is also not necessary for
our present purposes.
It was urged on behalf of the Revenue by Mr.
Sharma, its learned counsel, that section 24 is wholly. inapplicable to the
facts of the present case. He contended that on the facts of this case there
was no 'disposition. He further contended that under the terms of the partition
deed, the property did not revert wholly to the disponers. According to him it
partly reverted to the disponers and partly to the widow of Chandrasekhara Rao,
who cannot be considered as one of the disponers.
Mr. Rama Rao, learned counsel for the
assessee, on the other hand, contended that under the partition deed, there was
a 'disposition' in favour of kotamma and on her death the property reverted
back to all the disponers. As we are in agreement with the contention of Mr.
Sharma on the first point, namely, that there was no 'disposition' under the
partition deed, we do not think it necessary to go into other contention.
We are unable to accept the contention of Mr.
Rama Rao that under the partition deed there was 'disposition'. According to
him, the true nature of the transanctions entered into under the partition deed
were that Kotamma gave up all her rights in the family properties, including
her right to maintenance unilaterally, but at 900 the same time the other
members of the family 'voluntarily gave her 25 acres of wet land to be enjoyed
by her during her life-time. For this contention of his he placed reliance on
the terms of the partition deed. In a matter like this we are not merely to
look the form in which the deed is drawn up. We are to find out the true nature
of the transaction. From the facts set out above it is absolutely clear that
under the partition deed Kotamma gave up her rights to the extent mentioned
earlier and in lieu thereof the other members of the family allotted to her
share 25 acres of wet land to be enjoyed by her during her life-time.
It was an adjustment of rights. The
contention of Mr. Rama Rao that there was 'disposition' under the partition
deed- the contention which has appealed to the High Court-appears;
to us to be an erroneous one. A Partition is
not a transfer in a strict sense. It is an adjustment of the rights of the
various members of the family. In Commissioner of Income- Tax, Gujarat v.
Keshavlal Lallubhai, Patel(") this Court quoted with the approval a
passage from the decision of the Madras High Court in Gutta Radhakrishnayya v.
Gutta Sarasamma. (2) That passage reads thus :
"Partition is really a process in and by
which a joint enjoyment is transformed into an enjoyment in severally. Each one
of the sharers had an antecedent title and, therefore, no conveyance is
involved in the process, as a conferment on a new title is not necessary."
This Court had to consider the meaning of the word 'disposition' occurring in
section 2(xxiv) of the Gift Tax Act. That section defined the expression
'transfer of property' thus :
"2. (xxiv) "transfer of
property" means any disposition, conveyance, assistant, settlement,
delivery, payment or other alienation of property and, without limiting the
generality of the foregoing, includes- (a) the creation of a trust in property;
(b) the grant or creation of any lease,
mortgage, charge, easement, licence, power, partnership interest in property;
c) the exercise of a power of appointment of
property vested in any person, not the owner of the property, to determine its
disposition in favour of any person other than the donee of the power; and (d)
any transaction entered into by any person with intent thereby to diminish
directly or indirectly (1) 55 I. T. R. 637. (2) 1.L. R.  Mad. 607.
901 the value of his own property and to
increase the value of the property of any other person." The question for
consideration in that case was, inter-alia, whether a partition is a
'disposition'. Dealing with this question this Court in Commissioner of Gift
Tax, Madras v. M. S. Getti Chattiar(1). observed:
"A reading of this section clearly goes
to show that the words "disposition", "conveyance",
"assignment"," settlement", "delivery" and
"payment" are used as some of the modes of transfer of property. The
dictionary gives various meanings for those words but those meanings do not
help us. We have to understand the meaning of those words in the context in
which they are used. Words in the section of a statute are not to be
interpreted by having those words in one hand and the dictionary in the other.
In spelling out the meaning of the, words in a section, one must take into
consideration the setting in which those terms are used and the purpose that
they are intended to serve. if so understood, it is clear that the word
"disposition", in the context, means giving away or giving up by a
person of something, which was his own, "conveyance" means transfer
of ownership, "assignment" means the transfer of the claim, right or
property to another, "settlement" means, settling the property, right
or claim--conveyance or disposition of property for the benefit of another,
"deli- very" contemplated therein is the delivery of one's property
to another for no consideration and "payment" implies gift of money
by someone to another. We do not think that a partition in a Hindu undivided
family can be considered either as "disposition" or
"Conveyance" or "assignment" or "settlement" or
"delivery"' or "payment" or "alienation" within
meaning of those, words in section 2(XXIV)." We see no reason why we
should not place the same interpretation on the word 'disposition' in section
24 of the Act.
For the reasons mentioned above this appeal
is allowed. The answer given by the High Court to the question referred to it
is vacated and in its place we answer that question in the negative and in
favour of the Revenue. The respondent shall pay the costs, of the appellant in
V.P.S. Appeal allowed:
(1) 82 1. T. R. 599, 605.