Controller of Estate Duty vs S. Kalaivanan

K.A. Thanikkachalam, J.—At the instance of the applicant, the Tribunal referred the following two questions for the opinion of this court u/s

64(3) of the Estate Duty Act :

(i) Whether on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the throwing of the individual

property into the hotchpot of the joint family would not amount to a ''disposition'' within the meaning of Section 27(1) of the Estate Duty Act, read

with the Explanation to Section 2(15) of the Estate Duty Act ? and

(ii) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the provisions of Section 13 of the

Estate Duty Act cannot be applied to a case of blending of personal property with the character of the Hindu undivided family property and,

consequently, the inclusion of the value of the property in its entirety is not correct ?

In so far as the first question is concerned, the point for consideration, is whether the throwing of the individual property into the hotchpot of the

joint family would amount to a disposition within the meaning of Section 27(1) of the Estate Duty Act read with the Explanation to Section 2(15) of

the Estate Duty Act. A similar question came up for consideration before the Supreme Court in Controller of Estate Duty, Madras Vs. N.

Shankaran, , wherein the Supreme Court has held that the act of a member of a Hindu undivided family by which he impresses his individual

property with the character of joint family property or throws it into the hotch-pot of the joint family property or blends it with the joint family

property is not a ""disposition"" within the meaning of the Estate Duty Act, 1953, and will not attract estate duty u/s 9 read with Section 27 of the

Act.

Accordingly, we answer this question in the affirmative and against the Department.

In so far as question No. 2 is concerned, the point for consideration is whether the provisions of Section 13 of the Estate Duty Act can be

applied to a case of blending of personal property with the character of the Hindu undivided family property and, consequently, the inclusion of the

value of the property in its entirety is correct. Section 13 of the Estate Duty Act requires the property which was previously owned by one to

cause it to be vested in him and any other person jointly before it can be applied. When a separate property is converted into a joint family

property, the property vests in the family as an entity by itself. It will be inaccurate to say that the father owns the property jointly with the family.

The rule of survivorship is also abrogated in situations as in Sections 6 and 30 of the Hindu Succession Act, 1956. This was the view taken in

A.N.K. Rajamani Ammal Vs. Controller of Estate Duty, . Therefore, in the case of the property in the hands of a joint family, it cannot be said that

the property was owned by the members of the family jointly, since the property belongs to the joint family, which is a separate unit.

Accordingly, there is no error in the order passed by the Tribunal by holding that Section 13 of the Estate Duty Act will not apply to the facts of

this case. We answer question No. 2 referred to us also in the affirmative and against the Department. There will be no order as to costs.