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PETITIONER: CONTROLLER OF ESTATE DUTY, KARNATAKA, BANGALORE

       Vs.

RESPONDENT: UMESH RUDRA

DATE OF JUDGMENT15/01/1979

BENCH:

ACT:      Estate Duty  Act, 1953,  S. 10, enjoyment to the entire exclusion of the donor, applicability when husband is donor.

HEADNOTE:      The deceased  gifted his  residential porperty  to  his wife, but  continued to  live there  with her. On his death, while calculating  the estate  duty, the  appellant included the value  of the  residential property,  in  the  principal value of  the  estate,  on  the  ground  that  the  deceased continued to  reside with  the wife,  even after  the  gift. Upholding the  High  Court’s  judgment,  and  rejecting  the special leave petition, the Court ^      HELD : Section 10 cannot be construed in a manner which would require  the husband  who has gifted residential house to the  wife, to  live separately  from her.  When the  wife obtains possession  of the house and remains in enjoyment of it, it  cannot be said that the husband who resides with the wife, is, on that account, in possession or enjoyment of the house so as to attract the applicability of Section 10. [952 B-D]      Mrs. Shamsum Nehar Mansur v. Controller of Estate Duty, West Bengal  71 ITR  301 : Sunil Roy v. Controller of Estate Duty,  Calcutta,  77  ITR  667;  Mohammad  Bhai  &  Anr.  v. Controller of  Estate Duty, A.P., 69 ITR 770; Kamla Pandalai v. Controller of Estate Duty, 105 ITR 531; approved.      Bibi Ahmedi  Begum v.  Controller of Estate Duty, U.P., 83 ITR 303, overruled.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION :  Special Leave Petition (Civil) No. 6331/78.      From  the  Judgment  and  Order  dated  1-6-78  of  the Karnataka High Court at Bangalore in T.R.C. No. 1/75      R.  N.   Sachthey  and   Miss  A.   Subhashni  for  the Petitioner.      The Order of the Court was delivered by      BHAGWATI, J.  This petition for special leave to appeal against an  order of  the High  Court of  Karnataka raises a question of  interpretation of section 10 of the Estate Duty Act, 1953.  The deceased  made a  gift  of  his  residential property to his wife on 27th November, 1957 and on his death which occurred  on 2nd  August,  1963,  the  question  arose whether the  value of the residential property was liable to be included  in the principal value of the estate passing on the death  of the deceased under section 10. The argument of the Revenue  was that  even  after  the  gift  the  deceased

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continued to reside with the wife and, therefore, it 952 could not  be said  that the  wife retained  possession  and enjoyment  of   the  residential   property  to  the  entire exclusion  of   the  deceased   and  hence  section  10  was attracted. Now  there can  be no  doubt  that  on  a  proper interpretation  of   section  10,   the  donee  must  retain possession and  enjoyment of  the  property  gifted  to  the entire exclusion  of  the  donor,  in  order  to  repel  the applicability of  that section. But we do not see how in the present case  it can  at all  be said  that the wife did not retain possession  and enjoyment of the residential house to the exclusion  of the  deceased, merely because the deceased in his  capacity as  husband continued  to reside  with  the wife. Section  10 cannot  possibly be  construed in a manner which would  require the  husband who has gifted residential house to  the wife  to live separately from her, if he wants to escape  from  the  mischief  of  that  section.  Such  an interpretation would  subvert family  life and  social order and would  be contrary  to morality and good sense. When the residential house  is gifted  to the  wife and  she  obtains possession and remains in enjoyment of it, it cannot be said that the  husband who  resides with  the wife, as in a happy family life  every husband  would be  expected to do, is, on that account,  in possession  of the residential house or in enjoyment of  it. It  is the  wife who  is in possession and enjoyment of  the residential  house  and  the  husband,  by reason of  the marital  ties, continues  to reside  with the wife. We  do not  think that  section 10  would  at  all  be attracted in such a case.      We find  that this  view has been taken by the Calcutta High Court  in Mrs.  Shamsum Nehar  Mansur v.  Controller of Estate Duty,  West Bengal(1)  and Sunil Roy v. Controller of Estate Duty,  Calcutta(2), the  Andhra Pradesh High Court in Mohammed Bhai  and another  v. Controller of Estate Duty,(3) the Madras  High Court  in Kamla  Pandalai v.  Controller of Estate Duty,(4) and the Karnataka High Court in the judgment under appeal  and it  commends itself  to us.  We think that theise High  Courts rightly refused to apply section 10 to a case like  the present  where the  husband  has  gifted  the residential house  to the  wife and  thereafter continued to reside with  the wife in the residential house. The contrary view taken  by the Allahabad High Court in Bibi Ahmedi Begum v. Controller  of Estate  Duty, U.P.  (5) must be held to be erroneous.      We accordingly reject the special leave petition. M. R.                                    Petition dismissed. 953