# CONTROLLER OF ESTATES DUTY, ANDHRA PRADESH HYDERABAD v. KANCHARLA KESA YA RAO April 4; 1973

- **Citation:** [1973] 3 S.C.R. 897
- **Court:** Supreme Court of India
- **Decided:** 1973
- **Case number:** ; Civil Appeal No. 107 of 1970
- **Bench:** S. Hegde, H. R. Khanna
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/controller-of-estates-duty-andhra-pradesh-hyderabad-v-kancharla-kesa-ya-rao-6576
- **Pages:** 5

## Headnote

897
Estate Du~ Act, 1953, Ss. 7 and 24-Partition-Allo~men! to ,wid~w
bl meonbr of a Hindu undivided family property for life t11ne in lieu
of her share-If liable to estate duty on her ·death,
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 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 those rights, and i;n lieu thereof,
the other members of the family allottc-<l 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 Ac~ on the property allotted to her.
On
the
questicm 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 exompt from estate duty,
the
High Court, on reference, held in favour of the assessee.
Allowing the appeal too this Court,
HELD : A partition of a Hindu undivided family is a mere adjustment of rights.
It cannot be considered to be a tra'tlSfer 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]
Co1nmissioner of Jncome·tax, Gujarat v. Keshevlal Lallubhai Patel.
55 I.T.R. 637 and Commissioner of Gift Tax, Madras v. N. S. Gettj
Cherti<r, 82 I.T.R. 599; 605, followed.

## Text

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CONTROLLER OF ESTATES DUTY,
ANDHRA PRADESH HYDERABAD
v.
KANCHARLA KESA YA RAO
April 4; 1973
[K, S. HEGDE AND H. R. KHANNA, JJ.]
897
Estate Du~ Act, 1953, Ss. 7 and 24-Partition-Allo~men! to ,wid~w
bl meonbr of a Hindu undivided family property for life t11ne in lieu
of her share-If liable to estate duty on her ·death,
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 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 those rights, and i;n lieu thereof,
the other members of the family allottc-<l 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 Ac~ on the property allotted to her.
On
the
questicm 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 exompt from estate duty,
the
High Court, on reference, held in favour of the assessee.
Allowing the appeal too this Court,
HELD : A partition of a Hindu undivided family is a mere adjustment of rights.
It cannot be considered to be a tra'tlSfer 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]
Co1nmissioner of Jncome·tax, Gujarat v. Keshevlal Lallubhai Patel.
55 I.T.R. 637 and Commissioner of Gift Tax, Madras v. N. S. Gettj
Cherti<r, 82 I.T.R. 599; 605, followed.
CIVIL APPELLATE JURISDICTION. ; Civil Appeal No. 107 of
1970.
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 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 reference under section 64(1) of the Esta1e Duty Act, 1953 (to
898
SUPREME COURT REPORTS
[1973] 3 s.c.R.
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 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 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
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CONTROLLER OF ESTATES DUTY v. K. K. RAO (Hegde, J.)
89~
Hindu family governed by the Mitakshara, Marumakkattayam 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
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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 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 disponers 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 'disposition' 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 properties, including her right to maintenance unilaterally, but at
900
SUPREME COURT REPORTS
[1973] 3 s.c.R.
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 adjustment 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 adjustment 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 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) "trans.fer 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)
(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 property 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
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{ d) any transaction entered into by any person with
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intent thereby to diminish directly or indirectly
( I) SS I. T. R. 637.
(2) I. L. R. [19SI] Mad. 007.
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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 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 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 disposition of propeny for the benefit of another, "delivery" 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 "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 interpretation 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.
H
V.P.S.
Appeal allowed:
(1) 82 I. T. R. 599, 605.