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PETITIONER:

CONTROLLER OF ESTATE DUTY, MADRAS

Vs.

RESPONDENT:

N. SHANKARAN ETC.

DATE OF JUDGMENT01/11/1991

BENCH:

RANGNATHAN, S.

BENCH:

RANGNATHAN, S.

FATHIMA BEEVI, M. (J)

OJHA, N.D. (J)

CITATION:

1991 SCR Supl. (2) 167 1992 SCC Supl. (1) 447

1991 SCALE (2)958

ACT:

Estate Duty Act, 1953--Sections 21(5), 9, 27--'Blend-

ing'-'Partition '--Whether 'disposition '.

HEADNOTE:

A common question of law that arises for determination

in these appeals by special leave is whether the act of a

member of a joint family by which he impresses his individu-

al property with the character of joint family property or

"throws" it into the hotch potch of the joint family or

"blends" it with the joint family property is a 'disposi-

tion' within the meaning of the Estate Duty Act, 1953. In

Civil Appeal No. 1204 of 1979 the facts are: One Natesan

Chetty who died on 1.3.1972, was the Karta of a Hindu Undi-

vided Family, consisting of himself and his four sons. He

owned five house properties in Madras, On 18.6.70 and

16.9.1970, he made declarations by which he impressed the

properties with the character of joint family properties and

further declared that they would thereafter belong to HUF of

which he was the Karta. Thereafter a partition was effected

in the family in March 1971 in which two of the properties

came to his share. Sri Chetty had also borrowed Rs. 46,800

from HUF out of the rental income from the properties for

his business purposes. These borrowings were duly repaid in

April, 1971.

In completing the assessment to estate duty of the

estate passing on the death of Natesan Chetty, the Assistant

Controller of Estate Duty held that the declarations made by

the deceased on 18.6.70 and 16.9.70 were "dispositions"

within the meaning of the said expression as defined in the

second explanation to section 2(15) of the Estate Duty Act.

He further held that since the declarations were made with-

out consideration, they amounted to gift which had been made

within two years of the date of death and hence liable to be

assessed as part of the estate passing on death under sec-

tion 9 of the Act. The two properties which had fallen to

the share of the deceased passed on the death of the de-

ceased. He accordingly included Rs. 1,22,500 the value of

the other three properties also in

168

the principal value of the estate. The Asstt. Controller

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further held that a sum of Rs. 46,800 being the loan taken

and discharged by the deceased should also be added back in

computing the principal value of the estate by virtue of

section 46(2) of the Act.

Dissatisfied with the conclusion of the Asstt. Control-

ler, the accountable person preferred an appeal to the

Appellate Controller of Estate Duty which was successful.

Thereupon the Department preferred an appeal to the Tribunal

which, following the decision of the Madras High Court in

Rajamani Ammal v. Controller of Estate Duty, (1972) 84

I.T.R. 790 held that the sum of Rs. 1,22,500 could not be

included in the value of the estate passing on the death and

consequently, that the add back of Rs. 46,800 was also not

justified. Thereupon the Controller of Estate Duty applied

under Section 64 (1) of the Act for a reference to the

Madras High Court for its opinion on the two questions. The

Madras High Court was of the opinion that the basic question

at issue was covered by the earlier decisions of the Court

in Rajamani Ammal v. Controller of Estate Duty and Control-

ler of Estate Duty v. Smt. Mookammal, (1978) 110 I.T.R. 581.

The High Court declined to call for a reference and dis-

missed the application for reference. Hence the appeals by

the Department.

Dismissing the appeals, this Court,

HELD: "Blending" or "partition" will not be a 'disposi-

tion' within the ordinary connotation of the expression but

will be one if either of the Explanations to Section 2(15)

are attracted. [179 G]

Unlike an unequal partition, the act of blending will

not amount to a 'disposition' attracting Ss. 9 and 27 of the

Act. [179 H - 180 A]

The High Court was right in holding that the acts of

blending did not result in the 'gift' of immovable proper-

ties within the meaning of the statute. [180 C]

Though a declaration of blending does not amount to a

'gift' where the act of blending is followed up by a subse-

quent partition, the two transactions taken together do

result in the extinguishment, at the expense of the de-

ceased, of his rights in the properties which go to the

share of other coparceners at the subsequent partition and,

if the two can be treated as parts of the same transaction

the Explanation to Section 2 (15) may be attracted. [180 D-

E]

169

Rajamani Ammal v. Controller of Estate Duty, (1972) 84

ITR 790; Controller of Estate Duty v. Smt. Mookammal, (1978)

110 ITR 581; Rangabayaki Ammal v. CED, (1973) 88 ITR 96; CED

v. Kantilal Trikamlal, (1978) 105 ITR 92; Stremann v. CIT,

(1965) 66 ITR 62 SC; Goli Eswariah v. CGT, (1970) 76 ITR

675; C.G.T.v. Getti Chettiar, (1971) 82 ITR 599; Cherukuru

Eswaramma v.C.E.D, (1968) 69 ITR 109; CED v. Jai Gopal

Mehta, (1972) 85 ITR 175FB; C.E.D., v. Laxmi Bai, (1980) 126

ITR 73; C.E.D.v. Babubhai T. Panchal, (1982) 133 ITR 455;

and C.E.D.v. Satyanaravan Babulal Chaurasia, (1983) 140 ITR

158, referred to.

JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1204 (NT)

of 1979.

From the Judgment and Order dated 3.2.1978 of the Madras

High Court in Tax Case Petition No. 271 of 1977.

WITH

Civil Appeal No. 4371 (NIT) of 1991.

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Ms. A. Subhashini for the Appellant.

Ms. Janaki Ramchandran and A.T.M. Sampath for

the Respondents.

The Judgment of the Court was delivered by

RANGANATHAN, J. Both these matters raise the same ques-

tion viz. whether the act of a member of a joint family by

which he impresses his individual property with the charac-

ter of joint family property or "throws" it into the hotch

potch of the joint family or "blends" it with the joint

family property is a "disposition" within the meaning of the

Estate Duty Act, 1953 ('the Act', for short).

Civil Appeal no. 1204/79 is an appeal from an order of

the High Court declining to call upon the Income-tax Appel-

late Tribunal to refer the above question for the decision

of the High Court in view of certain earlier decisions of

the Court. The Madras High Court also declined to direct a

reference on the above issue in T.C.P. No. 478 of 1977 and

that is the subject matter of SLP (C) No. 335 of 1979. In

view of the pendency of Civil Appeal No. 1204/79, we grant

special leave in SLP (C) No. 335/79 also.

Before discussing the correctness of the above conclu-

sion, it may be convenient to set out the background of

facts in Civil Appeal No. 1204/79.

170

That appeal arises out of the estate duty assessment conse-

quent on the death of one Natesan Chetty, who died on

1.3.72. He was the Karta of a Hindu Undivided Family (HUF)

consisting of himself and his four sons. He was also the

owner, in his individual capacity, of five house properties

in Madras. On 18.6.1970 and 16.9.1970 he made declarations

by which he impressed the above mentioned properties with

the character of joint family properties and declared that

they would thereafter belong to HUF of which he was the

karta. Subsequently, a partition was effected in the family

in March 1971 in which two of the above mentioned properties

came to the share of the deceased. Sri Natesan Chetty had

also borrowed a sum of Rs. 46,800 from the HUF out of the

rental income from the above mentioned properties for being

invested in the business earned on by him. These borrowings

were made between March 1970 and April 1971 and they were

repaid in April 1971.

In completing the assessment to estate duty of the

estate passing on the death of Natesan Chetty, the Assistant

Controller of Estate Duty held that the declarations made by

the deceased on 18.6.1970 and 16.9.1970 were "dispositions"

within the meaning of the said expression as defined in the

second explanation to section 2(15) of the Act. These dispo-

sitions having been made for no consideration within the

meaning of s. 27 (1), amounted, according to him, to gifts

and since the gift had been made within two years of the

date of death, the subject matter of the gift was liable to

be assessed as pan of the estate passing on death under

section 9 of the Act.

As already mentioned, two of the properties had been

allotted to the share of the deceased in the partition of

1971 and it is common ground that they passed on the death

of the deceased as they belonged to him on the date of his

death. The question, however, was whether the other three

properties which went to the other members of the family as

a result of the declarations and partition were also liable

to be included as pan of the estate deemed to pass on the

death of the deceased by the application of section 9 read

with S.27 (1) and section 2(15) of the Act. The Assistant

Controller answered this question in the affirmative and

included their value, taken at Rs. 1,22,500, in the princi-

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pal value of the estate. As a consequence of his conclusion

that the properties were liable to be included in the es-

tate, the officer ,,I so took the view that the sum of Rs.

46,800 being the loan taken by the deceased from the HUF and

discharged within two years prior to the death should be

added hack in computing the principal value of the estate by

reason of the provisions of section 46 (2) of the Act. It is

not in dispute before us that though two points were thus

involved in the assessment--one regarding the inclusion of

the value of

171

three items of property as part of the estate of the de-

ceased passing on his death and the other regarding the

addition or disallowance of the debt of Rs. 46,800 -- they

are inter-connected and that, if the first question is

answered in favour of the assessees, the second question

will also stand answered likewise.

Dissatisfied with the conclusion of the Assistant Con-

troller, the accountable person preferred an appeal to the

Appellate Controller of Estate Duty which was successful.

Thereupon the Department preferred an appeal to the Tribunal

which, following a decision of the Madras High Court in

Rajamani Ammal v. Controller of Estate Duty. (1972) 84

I.T.R. 790 held that the sum of Rs. 1,22,500 could not be

included in the value of the estate passing on the death

and, consequentially, that the add back of Rs. 46,800 was

also not justified. Thereupon the Controller of Estate Duty

applied, under S. 64 (1) of the Act, for a reference to the

Madras High Court, for its decision, of the following two

questions:

"1 Whether, on the facts and in the

circumstances of the case, the Appellate

Tribunal was right in holding that the trans-

action by which a Hindu impressed his separate

properties [as] with joint family character

could not be considered as a disposition under

the second explanation to section 2(15) and

section 27 of the Estate Duty Act ?

2. Whether, on the facts and in the

circumstances of the case, the Tribunal was

right in holding that the addition of Rs.

1,22,500 made under section 9 and Rs. 46,800

made under section 46(2) could not be sus-

tained in the case of the deceased ?"

The Madras High Court was of the opinion that the basic

question at issue was covered by the earlier decisions of

the Court in Rajamani Ammal v. Controller of Estate Duty,

(1972) 84 ITR 790 as well as a subsequent decision in Con-

troller of Estate Duty v. Smt. Mookammal, (1978) 110 ITR

581. The Court found no substance in the attempt, on behalf

of the Revenue, to distinguish the above decisions on the

strength of a decision of the Court in Ranganayaki Ammal v.

CED, (1973) 88 I.T.R 96 which had been confirmed by the

Supreme Court in CED v. Kantilal Trikamlal, (1978) 105

I.T.R. 92. In this view of the matter the High Court de-

clined to call for a reference on the two questions above

mentioned and dismissed the application for reference. Hence

the present Civil Appeal. It is not necessary to set out the

facts in SLP No. 335 of 1979 where the question involved is

the same except that there was no subsequent partition after

the blending and that no question regarding the deductibili-

ty of debts also arose in this case.

172

It will be seen that both these appeals are directed

against the orders of the High Court declining to call for a

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reference. It is fairly clear that the questions whether

Rajamani Ammal was rightly decided and whether, if so, it

needed reconsideration in the light of Kantilal Trikamlal

are questions of law. But, in view of the long lapse of

time, we have considered the issues on merits and since we

are satisfied that the High Court's conclusion was correct,

we dispose of the appeals straightaway without going through

the formality of asking the Tribunal to make a reference to

the High Court and then awaiting the High Court's decision

on the question of law referred.

The Estate Duty Act 1953 has ceased to be enforceable

since 16.3.1985. In the circumstances we need not elaborate-

ly set out the provisions of the Act and the principles

behind them. An outline of the provisions necessary for the

determination of the issue before us will suffice. The Act

levies a duty on the aggregate market value of the proper-

ties passing on the death of any person (statutorily termed

the 'principle value of the estate'). It is manifest that

the statute could be easily circumvented if duty-were re-

stricted only to properties which actually pass on a death,

for, various of devices could be thought of by which the

property of such person could ostensibly be transferred to

others sometime before the death, although it continues to

be really under the domain and control of the deceased till

the time of his death. The statute therefore contains elabo-

rate provisions deeming certain properties to pass on death

even though their beneficial enjoyment may not actually

change hands at the time of his death. One such item of

properties which are deemed to pass on the death of a person

are those which formed the subject matter of a gift made by

him within a specified period preceding his death. S.9 of

the Act, which contains this deeming provision reads thus:

"9.Gifts within a certain period before

death--(1) Property taken under a disposition

made by the deceased purporting to operate as

an immediate gift inter vivos whether by way

of transfer, delivery, declaration of trust,

settlement upon persons in succession, or

otherwise, which shall not have been bona fide

made two years or more before the death of the

deceased shall be deemed to pass on the

death".

In short, the provision enabled the Revenue to ignore any

gift of property made by the deceased within two years of

his death by creating a statutory fiction that properties so

gifted passed on the death of the deceased,

173

although, in fact and in law, they ceased to be his a short

time before his death. This is the first fiction.

The legislature next proceeded to enact a second fic-

tion. This was in order to bring into the net of taxation

transactions which may not be comprehended within the legal

concept of a gift because they are ostensibly made for some

consideration. It provided in section 27 that:

"27. (1) Dispositions in favour of

relatives--Any disposition made by the de-

ceased in favour of a relative of his shall be

treated for the purposes of this Act as a gift

unless---

(a) the disposition was made on the part of

the deceased for full consideration in money

or money's worth paid to him for his own use

or benefit; or

(b) .......... ; and references to a gift in

this Act shall be construed

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accordingly: .......... "

Resort to this provision in the present case is needed for a

purpose. Admittedly, the deceased received no consideration

for impressing the property with the character of joint

family property. If this amounted to a transfer, then S.9

alone would be sufficient to bring the properties within the

net of taxation. But it could be argued that a gift involves

a 'transfer' without consideration but the act of blending

does not constitute a 'transfer' [vide: Stremann v. CI.T.,

(1965) 56 I.T.R. 62 (S.C.) and a host of other cases under

the Income-tax Act]. Section 27 helps the Department in the

present case only in that it uses a much wider word, 'dispo-

sition', and treats dispositions in favour of relatives as

gifts.

The statute had to make provision for a third fiction as

well as it could still be contended that the word 'disposi-

tion' would not be sufficient to comprehend certain types of

transactions. To be on the safe side, therefore, the statute

proceeded to enact a special definition of the word 'dispo-

sition' in section 2(15) of the Act wide enough to rope in

various kinds of acts in respect of property. This provi-

sion, insofar as it is material for our present purposes,

reads as follows:

"2(15) 'Property' includes any interest in

property, movable or immovable, the proceeds

of sale thereof and any money or investment

for the time being representing the proceeds

of sale and also includes any property con-

verted from one species into another by any

method;

Explanation I--The creation by a person or

with his consent

174

of a debt or other right enforceable

against him personally or against property

which he was or might become competent to

dispose of, or to charge burden for his own

benefit, shall be deemed to have been a

disposition made by that person, and in rela-

tion to such a disposition expression 'proper-

ty' shall include the debt or right created.

Explanation 2--The extinguishment at the

expense of the deceased of a debt or other

right shall be deemed to have been a disposi-

tion made by the deceased in favour of the

person for whose benefit the debt or right was

extinguished, and in relation to such a dispo-

sition the expression 'property' shall include

the benefit conferred by the extinguishment of

the debt or right;

The short case of the department now is this; the de-

ceased in these cases was the full and exclusive owner of

the immovable properties in question. By the act of blending

he has convened them into HUF propertieS. The properties no

longer belong to him as an individual; they belong to the

family thereafter with certain rights qua them in the other

members of the HUF. In other words, there 'has been an

extinguishment, at the expense of the deceased, of a part,

at least, of his rights in the properties with a correspond-

ing benefit to the others. There has also been the creation,

by the deceased, of a right in the others enforceable

against the deceased and the properties e.g. the right to

demand a partition. The deceased, therefore, has made a

disposition in favour of his relatives for

no consideration within two years of his death. The

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value of the properties, in respect of which he made the

disposition in favour of the family, are, therefore, liable

to be included in the principal value of the estate passing

on his death under section 9 read with section 27 read with

the Explanations to section 2(15). This is quite apart from

the fact that the value of the two properties, which subse-

quently fell to the share of the deceased at the partition

in March 1971, are liable to be included as his own property

actually passing on his death. The question that we have to

consider is, therefore, whether the legal incidence of the

act of blending an be brought within the four corners of the

two Explanations to section (15) of the Act.

It was precisely this question which had been considered by

the

Madras High Court earlier in Rajamani Ammal v. Controller of

Estate Duty (1972) 84 I.T.R. 790. in deciding the issue, The

High Court had the benefit of two earlier decisions of this

Court in Goli Eswariah v. C G.T., (1970) 76 I.T.R. 675 and

CG.T, v. Getti Chettiar., (1971) 82 I.T.R. 5991,

175

where this Court had held, in the context of the Gift Tax

Act, that the act of blending and the act of a coparcener

receiving, on partition of a HUF, less than the share he was

entitled to receive would not constitute gifts. The details

of this decision need to be set out at some length.

Three contentions had been urged in Rajamani: (a) The

first was that the act of blending constituted a 'disposi-

tion' within the general meaning of that word. Repelling

this contention, the Court observed:

"The learned counsel for the revenue placed

strong reliance on the word "disposition" in

section 27 (1) of the Act and contended that

even an act of throwing of the self-acquired

property into the common stock of a joint

Hindu family is included in that expression.

In a case arising under the Gift-tax Act, the

word "disposition" came up for consideration

in the decision in Goli Eswariah v. Commis-

sioner of Gift-tax, (1970) 70 I.T.R 675

(S.C.). The Supreme Court held that the word

"disposition" refers to a bilateral or a

multilateral act and it does not refer to a

unilateral act. This decision of the Supreme

Court approves the decision of this court in

Commissioner of Gift-tax v.P. RangasamiNaidu,

(1970) 76 I.T.R. 315 (Mad) (F.B). It is true

that these decisions are under the Gift-tax

Act. It is also true that the word "disposi-

tion" was considered in these decisions, with

particular reference to the definition of

"transfer of property" under that Act. We are

of the view that the word "disposition" in

section 27(1) of the Estate Duty Act also

refers to a bilateral or multilateral act. The

section refers to a disposition by the de-

ceased in favour of a relative and also speaks

of partial failure of consideration. Section 9

also refers to property "taken under a dispo-

sition". Therefore, in our opinion the word

"disposition" in section 27(1), however wide

its ambit may be, would not include the uni-

lateral act of a person by which he throws his

self-acquired property into the common stock

of the joint family."

(b) It had been next contended, on behalf of the Revenue

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that, by throwing the self-acquired properties into the

common stock of the joint family, the deceased had created a

right enforceable against him in favour of the sons or the

other coparceners viz. the right to demand partition of the

properties in question which they could not have exercised

earlier. This contention was rejected by the learned judges

by applying the principle enunciated in an earlier Full

Bench decision of the Court in CIT v. Rangasami Naidu,

(1970) 76 I.T.R. 675, where a similar contention had been

repelled in the context of the Gift Tax Act. The Court had

there observed:

176

"With the father having absolute power of

disposition inter vivos or testamentary in

respect of his self-acquisition and with no

power in the son to interdict any alienation

or disposition or call for partition, the

son's interest is next to nothing. But the

right is real. It lies dormant. It is this

dormant right which the undivided sons have in

their father's property that entitles them to

take the self-acquired property of the father

as coparceners to the exclusion of a divided

son. Juridically, it must be this dormant

birth-right that enables the father at his

pleasure, without formalities, to deny to

himself his independent power or predominant

interest and look upon the property as the

property of the family.

In our view, it is this birth-right imperfect

and subordinate to the special power and

predominant interest of the father that comes

into play and makes the interest of the son

real and an interest in praesenti, when the

father chooses to waive his rights. At his

pleasure and without reference to his son, if

the father abandons or determines once for all

not to exercise his independent power over the

property, the son's interest therein becomes a

real and full-fledged coparcenary right. There

is no vesting of rights here by the father on

the son, but what is dormant springs to life

but irrevocably at the pleasue of the father."

(c) A third contention raised on behalf of the Revenue

was that throwing the self-acquired property into the common

stock of the joint family would amount to "extinguishment at

the expense of the deceased of a debt or other right" within

the meaning of Explanation 2 to section 2 (15). This conten-

tion was also repelled by the learned Judges. They observe:

"We are also of the opinion that throwing the

self-acquired property into the common stock

of the joint family will not amount to "extin-

guishment at the expense of the deceased of a

debt or other right" within the meaning of

Explanation 2 to section 2 (15). As seen from

the judgments cited above, after the act of

throwing into the common stock, it is the

joint family or the coparcenary that owns the

property. The person who converted his indi-

vidual property into joint family property is

a member of the Hindu joint family or the

coparcenary and contines to be a member of the

joint family. His interest in

177

the erstwhile separate property would

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extend to the whole of the property even as of

the other coparceners, for the interest of

every coparceners extends over the whole of

the joint family property. There is community

of interest and unity of possession between

all the coparceners. On the death of any one

of the coparceners the others take the proper-

ty by survivorship.It may be, the ultimate

survivor is the person who threw the self-

acquired property into the common stock. It,

therefore,

follows that there was no extinguishment

of the right of the deceased and creation of a

right in favour of another, in these of throw-

ing the self-acquired properties into the

common stock. The decision in Valliammal

Achi v. Controller of Estate Duty, (1969) 73

I.T.R. 806 (Mad) relied on by the learned

counsel for the revenue, and the decision in

Kantilal Trikamlalv. Controller of Estate

Duty, (1969) 74 I.T.R. 353 (Guj.), relied on

by the learned counsel for the accountable

person,related to what we may term as "unequal

partitions". They do not deal with cases of

throwing the self-acquired properties into the

common stock. We are not concerned with the

case as to whether an unequal partition would

amount to an extinguishment of a right and

creation of a benefit within the meaning- of

Explanation 2 to section 2(15), which was the

point that was considered in those cases."

The above decision is clearly against the

Revenue. The Revenue, however, strongly relies

upon a later decision of the same High Court

in Ranganayaki Ammal & Ors. v. Controller of

Estate Duty, (1972) 88 I.T.R. 96. It is sub-

mitted that Ranganayaki Ammal has been af-

firmed by this Court in CED v. Kantilal Tri-

kamlal, (1976) 105 ITR 92 - a common judgment

reversing Kantilal Trikamlal v. CE.D., (1969)

74 I.T.R. 353 (Guj) and affirming Ranganayaki

Ammal (Mad) - and, therefore, Rajmani is no

longer good law. It is therefore, necessary to

refer to these cases though the question

involved there was somewhat different.

In Ranganayaki Ammal, the deceased Bheema

Naidu and his widow and children constituted a

Hindu undivided family. A little within the

period of two years prior to the death of the

deceased, a partition was effected of the

joint family properties and in that partition

he took a smaller share instead of his legal

half benefiting the other to the extent of the

difference. The same thing had happened in the

case of Kantilal Trikamlal also. Trikamlal

Vadilal and his son Kantilal constituted a

Hindu undivided family. On 16th November,

1953, and instrument styled a "release deed"

was executed between the two persons. Under

this instrument, a sum of rupees one lakh out

of the joint family properties was taken by

178

the deceased m lieu of his share in the joint

family properties and he relinquished his

interest in the remaining properties of the

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joint family which were declared to belong to

Kantilal as his sole and absolute properties

and Kantilal also relinquished his interest in

the amount of rupees one lakh given to the

deceased and declared that the deceased was

the sole and absolute owner of the said

amount. Trikamlal Vadilal died on 3rd June,

1955, that is within two years of the release

deed. The Assistant Controller found that, as

on November 16, 1953, the deceased was enti-

tled to a one-half share in the joint family

properties, the value of which was Rs.

3,44,058, but had relinquished his interest in

the joint family properties by receiving only

a sum of rupees one lakh. The officer, there-

fore, held that the difference between

Rs.3,44,058 and Rs, 1,06,724 (being the amount

received by the deceased together with inter-

est) was includible in the principal value of

the estate of the deceased, being the value of

a disposition by the deceased in favour of a

relative for partial consideration. This

assessment was upheld eventually by the Su-

preme Court. Both these decisions, thus,

raised the question whether there was "gift"

within the meaning of S.9 read with S.27 read

with the Explanations to S.2(15) of the Estate

Duty Act where a coparcener in a HUF, at the

family parti-tion, voluntarily agrees to

accept properties of a value less than what

he is entitled to claim, as a matter of right,

at such partition. This Court--as did the

Madras High Court in Ranganayaki Ammal, the

Andhra Pradesh decision in Cherukuru Eswaramma

v. C.ED., (1968) 69 I.T.R. 109 and the Punjab

& Haryana High Court judgment in C.E.D.v. Jai

Gopal Mehra, (1972) 85 I.T.R. 175 (F.B.) -

answered the question in the affirmative. This

Court distinguished Go[i Eswariah, (1970) 76

I.TR. 675, S.C. and Getti Chettiar, (1971) 82

I.T.R. 599, S.C. on the ground that the defi-

nition of 'disposition' in Explanation 2 Sec-

tion 2(15) of the Estate Duty Act is much

wider than the scope of that expression used

in the Gift Tax Act.We do not consider it

necessary to set out here the full and de-

tailed reasoning of this Court in Kantilal

Trikamlal's case.

Before proceeding further, we may refer to

a few later decisions of High Court relevant

to the issue before ns. The Allahabad High

Court, in C.E.D.v. Laxmi Bai, (1980) 1.26,

I.T.R. 73, a decision rendered after Kantilal

Trikamlal, thought that the act of blending

would not be a 'disposition' within fie mean-

ing of:the Estate Duty Act. In C.E.D v. Babub-

hai T. Panchal, (1982) 133 I.T.R.455, the

Gujarat High Court had occasion to consider

the question whether a transaction of release

by a member of a Hindu Undivided family,

within a period of two years of his death, of

his interest in the family properties would

amount to a 'disposition' within the' meaning

of Explanation 2 to Section 2(15) of the

Estate Duty Act. The

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question was answered in the negative. In CE.D

v. Satyanarayan Babulal Chaurasia, (1983) 140

I.T.R. 158, the Bombay High Court, without

touching the issue in detail, merely held,

applying Goli Eswarian v. C G.T., (1970)76

I.T.R. 675 S.C, that the act of blending does

not involve a transfer.

The question that falls for our considera-

tion now is whether, despite the extended

definition in S.2(15) of the Act, as explained

in Kantilal Trikamlal, the act of blending,

unlike the voluntary acceptance of an unequal

partition, fails outside the purview of the

deeming part of the definition contained in

the explanations. We think the answer to this

question has to be in the affirmative, Revert-

ing once again to the contentions of the

Revenue in Rajamani (which are also the con-

tentions reiterated before us for the

Revenue), it will be remembered that Rajamani

specifically dealt with the language of the

two explanations 10 S.2(15) and that its

decision rested on three grounds:

(i) a 'disposition', as held on Goli

Eswariah, (1970) 76 I.T.R. 675 S.C., has to be

a 'bilateral' or 'multilateral' act or trans-

action, not a unilateral act;

(ii) the act of blending does not

create any right enforceable against the

blender or his property but only brings to the

surface rights already latent and inherent in

the others; and

(iii) the act of blending does not

result in the extinguishment of any right of

the blender with a correlative conferral of

benefit on others.

our view. Kantilal Trikamlal does not

affect the validity of any of the three

grounds set out above. So far as the first

ground is concerned, it does not touch upon

the reasoning of Goli Eswariah, not to say

doubt or dissent from it. It refers to C.E.D.

v. Kancherla Kesava Rao, (1973) 89 I.T.R. 261,

S.C.---hinting at possible distinction--and to

Getti Chettiar (but without any hint of dis-

sent) and points out that the conventional

construction of disposition' has to submit to

the larger sweep of hypothetical extension by

definition" and that, unlike under the Gift

Tax Act, "there is no limitation, environmen-

tal or by the society of words, warranting the

whittling down of the unusually wide range of

Explanation 2 to S.2 (15)". In other words,

the cumulative effect of Goli Eswariah, Getti

Chettiar and Kantilal Trikamlal is that

'blending' or 'partition' will not be a

'disposition' within the ordinary connotation

of the expression but will be one if either of

the Explanations to S.2(15) are attracted.

This takes us to the other two contentions

dealt with in Rajamani as to the scope of the

two explanations. On this aspect, Rajamani has

held that, unlike an

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equal partition, the act of blending will not

amount to a 'disposition' attracting Ss.9 and

27 of the Act. It distinguishes cases of

unequal partition dealt'with in Valliammal

Achi, v.C.E.D., (1969) 73 I.T.R, 806 (Mad) and

the High Court's decision in Kantilal Trikam-

lal (1969) 74 I.T.R. 353 (Guj.) cited before

it which have now received the imprimatur of

this Court in Kantilal Trikamlal. We are

inclined to think that the distinction has

been made on sound lines. We do not consider

it necessary to repeat or elaborate the rea-

soning in Rajamani on these two points as it

succinctly epitomises well-settled principles

of Hindu Law. Suffice it to say that we en-

dorse this reasoning and think that the High

Court was right in holding, in the present

cases, that the acts of blending did not

result in the 'gift' of immovable properties

within the meaning of the statute and that

Rajamani required no reconsideration because

of Ranganayaki Ammal/Trikamlal.

This disposes of the question sought to be

referred in these cases. We should however

like to advert to another aspect which may

arise for consideration at some future date.

It may, perhaps, be possible to contend that,

though a declaration of blending does not

amount to a 'gift', where the act of blending

is followed up by a subsequent partition, the

two transactions taken together do result in

the extinguishment, at the expense of the

deceased, of his rights in the properties

which go to the share of other coparceners at

the subsequent partition and that, if the two

can be treated as parts of the same transac-

tion, Explanation 2 to S.2(15) may be attract-

ed. But this, apart from being a totally new

question of law not raised at any stage and

not debated before us, would also require not

only a closer look from the legal angle but

also investigation into facts, particularly as

to whether the act of blending and the subse-

quent partition can be treated, in law and on

facts, as parts of a single transaction. We,

therefore, express no opinion on this issue.

For the reasons discussed above, these

appeals fail and are dismissed. But we make no

order regarding costs.

Y.L.

Appeals dismissed.

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