T.D. Sugla, J.@mdashIn this departmental reference, the Tribunal has referred to this court the following question of law for opinion u/s 64(1) of the Estate Duty Act, 1953 :
"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the amount Rs. 2,27,197 being the value of the annuity of the deceased adopted under the provision of the Wealth-tax Act should be taken as the property passing u/s 7 of the Estate Duty Act and not the sum of Rs. 4,12,260 adopted on the basis of section 40 of the Estate Duty Act ? "
2. It is common ground that the deceased, Smt. Jayabai Laxmidas Khatau, died on December 20, 1963. She had, at the time of her death, one-fourth share in the income from the trust settled by her husband in the year 1948. The principal value of the trust property was, admittedly, Rs. 16,49,040. There was no dispute that her life interest in the trust property ceased on death with in the meaning of section 7 of the Estate Duty Act. The dispute was only regarding the computation of the value of that interest. While it was the case of the Department that the value of her life interest in the trust property should be taken at one-fourth of the principal value of the trust property, i.e., Rs. 4,12,260, the case of the accountable person was that it should be the value that was taken in her wealth-tax assessment, i.e., Rs. 2,27,197.
3. Shri Jetley, learned counsel for the Revenue, has referred to the provisions of sections 7 and 40 of the Estate Duty Act. He stated that the deceased''s life interest was admittedly property which was deemed to cease on her death within the meaning of section 7 of the Act. According to Shri Jetley, section 40 of the Estate Duty Act lays down that if the interest of the deceased extends to the whole income of the trust property, the principal value of that property should be included. On the other hand, if that interest extends to less than the value of the principal value of the trust property that should be included.
4. Section 40 of the Estate Duty Act reads as under :
"The value of the benefit accruing or arising from the cesser of an interest ceasing on the death of the deceased shall -
(a) if the interest extended to the whole income of the property, be the principal value of that property; and
(b) if the interest extended to less than the whole income of the property, be the principal value of an addition to the property equal to the income to which the interest extended."
5. We see no difficulty in appearing the submission of Shri Jetley as regards clause (a) of section 40. However, the language used in clause (b) is materially different from that of clause (a). It does not follow from clause (b) that in case the life interest extends to less than the whole income from the trust property, the principal value of the property should be proportionately taken. In fact, the expression used in clause (b), viz., "the value of the benefit shall be the principal value of an addition to the property equal to the income to which the interest extended" to say the least, does not, in any way, support the submission of Shri Jetley. Accordingly, we answer the question referred to us by the Tribunal in the affirmative and in favour of the accountable person.
6. No order as to costs.
