Controller of Estates Duty, Andhra Pradesh Hyderabad v. Kancharla Kesava Rao

The Judgment of the Coun was_ delivered 1Jy HEGDE, J.-This is an appeal by certificate. It is directed againsit the decision of the Andhra Pradesh High Court in a re­ ference under section 64(1) of the Esta1e Duty Act, 1953 (to 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 member:; oi 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 righ.t to be maintain~ from out of the family in­ come, 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 sanle time the other members of th11 family allotted to her 25 acres of wet !and, which she was to enjoy during her life-time 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 dat<:d 16-6-1943 under .sectipn 7 of the Act. The accountable per5ons 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,'· rejec11ed 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 bl! 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 Ii CONTROLLER OF ESTATES DUTY v. K. K. RAO (Hegde, J.) 89~ Hindu family governed by the Mitakshara, Marumak­ kattayam or Aliyasantana law." The remaining portions of that section are not relevant for our present purposes. There is no dispute that when Kotamma died her interest in B 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 prese:it case comes under section 7 of the Act. Only queslion is whether the arrangement made under the partition deed can be considered as 'disposition' within the meaning of that expression in Section 24 or the Act. Now let us turn to c section 24(1). That section reads : "24(1) Property reverting to disponu.-Where by a disposition of any property an interest is conferred on ;my person o'!her than the disponer for the life of such person or determinable on his death, the remainder being conferred upon the disponer absolutely, and such D person enters into possession of the interest and thence­ forward 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 life­ time." The remaining portion of this section is also not necegsary for our E present uurposes. 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 teirns of the partition deed, the property did not revert wholly F to the disponers. According to him it partly reverted to the dis­ poners and partly to the widow of Chandrasekhara Rao, who cannot be considered as one or the disponers. Mr. Rama Rao, learned counsel for the assessee, on the other hand, contended that undet the partition cleed, there was a 'dis­ position' in favour of Kotarnma and on her death the property G 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 H 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 pro­ perties, including her right to maintenance unilaterally, but at the same time the qther memijlrs 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 natµre of the transaction. Froni the facts set out above it is absolutely clear that under the partition deed Kotarruna 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 durin,g her life-time. It was an adjust­ ment o.f rights. The contention of Mr. Rama Rao that there was 'disposHion' 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 ad­ justment 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 sever­ ality. 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 'disposi­ tion' occurring in section 2(xxiv) of the Gift Tax Act. That section defined the expression 'transfer of property' thus : "2. (xxiv) "trans.fer of property" means any dis­ position, conveyance, assistant, settlement, delivery, payment or other alienation of property and, without limiting the generality of the foregoing, includes--- (a) (b) (c) the creation of a trust in property; the grant or creation of any 'lease, mortgage, charge, easement, licence, power, partnership interest in property; the exercise of a power of appointment of pro­ perty vested in ;my 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 H intent thereby to diminish directly or indirectly ( I) SS I. T. R. 637. (2) I. L. R. [19SI] Mad. 007. CONTROLLER OF ESTATES DUTY v. K. K. RAO (Hegde, J.) 90 I'. 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-a/ia, 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 "paymene• are used as some of the modes of transfer of property. The dictionary gives various meanings for those words but those mean­ ings do not help us. We have to understand the mean­ ing of those words in the context in which they are used. Words in the section of a statute are not to be inter­ preted by having those words in one hand and the dic­ tionary in the other. In spelling oat the meaning of the words in a section, one must take into consideration the setting in which those tenns are used and 1he purpose that they are intended to serve. If so understood, it is clear that 1he word "disposition", in the context, means giving away or giving up by a person of something which was his own, "conveyance" means trans.fer of ownership, "assignment" means the transfer of the claim, right or property to another, "settlement" means settling the property, right or claim--<:onveyance or dis­ position of propeny for the benefit of another, "deli­ very" contemplated therein is the delivery of one's pro­ perty 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 "convey­ ance'' or "assignmen.1." 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 interpreta­ tion on the word 'disposi1ion' 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 I. T. R. 599, 605.