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PETITIONER: CONTROLLER OF ESTATES DUTY,ANDHRA PRADESH HYDERABAD

       Vs.

RESPONDENT: KANCHARLA KESAVA RAO

DATE OF JUDGMENT04/04/1973

BENCH: HEGDE, K.S. BENCH: HEGDE, K.S. KHANNA, HANS RAJ

CITATION:  1973 AIR 2484            1973 SCR  (3) 897  1973 SCC  (2) 384  CITATOR INFO :  RF         1976 SC1935  (14,26)

ACT: 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.

HEADNOTE: 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.

JUDGMENT: CIVIL  APPELLATE.   JURISDICTION : Civil Appeal No.  107  of 1970.

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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."

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The remaining portions of that section are not relevant  for our present purposes. 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, section  24(1). 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

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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  severality.  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. [1951] 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

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             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 this Court. V.P.S.                            Appeal allowed: (1)  82 1. T. R. 599, 605. 9 02