JUDGMENT
R.K. Abichandani, J.
1. An estate duty account was filed by the account was filed by the accountable person, Shri Babubhai Trikamlal Panchal on March 18, 1972, in respect of the estate of late Smt. Manigauri Trikamlal Panchal, who died intestate on March 10, 1971. The assessment was completed the Second Assistant Controller of Estate Duty, Ahmedabad, by his assessment order dated August 17, 1973, passed under section 58(3) of the Estate Duty Act, 1953 (hereinafter referred to as “the said Act”), and the principal value of the estate liable to duty was computed at Rs. 1,89,862. The estate of the deceased consisted of interest in the partnership firm of Messrs. Trikamlal and Co., ornaments, jewellery, etc. She had also interest in the Hindu undivided family of Trikamlal Panchal which originally consisted of the deceased, her husband, Trikamlal, and son Babulal. The husband of the deceased had expired on March 3, 1964, leaving behind him the deceased and the son. The Assistant Controller of Estate Duty held in his assessment order that in view of the provisions of section 6 of the Hindu succession Act, one-third share of the deceased husband in the Hindu undivided family had developed by succession on Manigauri had one-half share in the one-third share of her husband in the joint family property, i.e. she had one-sixth in the whole joint family property. Computing the value of the estate of the deceased Manigauri, the Assistant Controller of Estate Duty included the value of one-sixth share in the 9 items of movable property which, admittedly, at one point of time, belonged to the said Hindu undivided family. The accountable person preferred an appeal against the assessment order before the Appellate Controller of Estate Duty, Gujarat. It was contended before the appellate authority that the deceased Manigauri could not have claimed partition and that no right or interest in the property could be said to have arisen in her favour until actual partition took place. The appellate authority, holding that the decision of the Gujarat High Court in CGT v. Mrs. Taramati Hariprasad Vasa [1969] 74 ITR 211 [FB], on which reliance was sought to be placed by the appellant had no relevance, found that the Assistant Controller had rightly included on-half share of the deceased in the one-third share of her husband (i.e. one-sixth share) in the joint properties of the Hindu undivided family. The Appellate Controller of Estate Duty, by his order dated March 18, 1976, dismissed the appeal. The accountable person challenged the appellate order before the Income-tax Appellate Tribunal, Ahmedabad. It was contended before the Tribunal that Trikamlal had, as per release deed dated January 29, 1964, already relinquished his share in the movable property in favour of the other two members of the Hindu undivided family, namely, his wife Manigauri, and their son, Babulal, and, therefore, the one-third share of Trikamlal in the movable properties could not have passed on his death in favour of Mangauri and Babulal since, at the time of Tribunal found that, though the contention was raised by the accountable person before the Appellate Controller to the effect that one-sixth share in the said property of the three-member Hindu undivided family did not pass on the death of Manigauri, there was no discussion on the said version of the accountable person in the appellate order and though there was a release deed dated January 29, 1964, showing that Trikamlal had relinquished his one-third share in the movable property of the Hindu undivided family, that aspect was not considered in the assessment order. The Tribunal found no difficulty in holding that the one-third share of Trikamlal in the movable property of the Hindu undivided family stood released with effect from January 29, 1964, in view of the release deed and, therefore, when Tribunal, died on March 3, 1964, he had no share in the said movable property which could pass either to his wife or to his son. The Tribunal, however, found that this position either to his wife or to accountable person in the present case since, after the release of on third share of Trikamlal in the movable property of the Hindu undivided family, the entire movable property necessarily came to be vested in Manigauri and son Babulal and though there was no subsequent partition between these two persons, they had a defined one-half undivided share in the said movable property, and, therefore, on the death of Manigauri, it was not only one-sixth share but one-half share in the movable property that had passed. Therefore, the assessment order had not worked to the disadvantage of the accountable person when only one-sixth share in the movable property of the Hindu undivided family was included for computing the principal estate of the deceased Manigauri. The Tribunal, therefore, dismissed the appeal of the accountable person. In the above background, the Income-tax Appellate Tribunal has referred to the High Court for its opinion the following two questions at the instance of the accountable person :
“(1) Whether, on the facts and in the circumstances of the case, the tribunal was right in law in holding that one-half share in the movable property of the Hindu undivided family passed on the death of Smt. Manigauri ?
(2) Whether, on the facts and circumstances of the case, the Tribunal was right in law in rejecting the contention of accountable person that as in view of the release of his interest from the movable property of the Hindu undivided family by Trikamlal, Manigauri inherited no share there in on his death and no part of it could pass on her death as her property ?”
2. When the matter came up before a Division Bench of this court, the Division Bench, by its order dated April 3, 1986, felt that the decision of an earlier Division Bench in CED v. Babubhai T. Panchal [1982] 133 ITR 455 (Guj) requires reconsideration and referred the matter to a larger Bench.
3. The deceased Trikamlal, by a registered deed dated January 29, 1964, released in favour of his wife, Manigauri, and his son, Babulal, who were members of the joint Hindu family all his right, title and interest in all the movable properties including business belonging to the said joint family. The release of his share in the movable properties of the Hindu undivided family under the said deed has never been challenged by any one. The release deed, however, was made on January 29, 1964 , while the deceased died on March 3, 1964. This would mean that the release deed was made within the period of two years stipulated by section 9 of the said Act. This very release deed came to be considered in CED v. Babubhai T. Panchal [1982] 133 ITR 455 (Guj) and it was held that the provisions of Explanation 2 to section 2(15) were not attracted in this case with regard to the release by the deceased Trikamlal of his interest in the movable properties of the Hindu undivided family. In that case, the Assistant Controller had held that the said release deed was not an instrument of partition but a release deed simpliciter and that thereby there was relinquishment or renunciation by the deceased of his one third share or the movable property of the joint family and such relinquishment or release amounted to extinguishment, at the expense of the deceased, of his right in the Hindu undivided family and it was deemed to be a disposition in favour of his wife, Manigauri, and son, Babulal, within the meaning of Explanation 2 to section 2(15). As the release deed was executed within a period of two years before his death, one-third share of the Hindu undivided family in the movable property was held liable to estate duty under section 9 read with Explanation 2 to section 2(15) of the said Act. The said one-third share of Trikamlal in the movable property was, therefore, included by the Assistant Controller in the principal value of the estate of the deceased Tribunal. That order was confirmed by the Appellate Controller and the matter was carried to the Income-tax Appellate Tribunal which held that there was no partition and since it could not be predicated of the right of a Hindu coparcener as to what his share in the joint family property would be, Explanation 2 to section 2(15) of the Act was not attracted. The Tribunal, therefore deleted the inclusion of the value of one-third share of Trikamlal in the movable property of the Hindu undivided family. A reference was then made to the High Court for its opinion on the question whether the Tribunal was justified in holding that the provisions of Explanation 2 to section 2(15) were not attracted in that case with regard to the release by the deceased Trikamlal of his one-third share in the movable properties of the Hindu undivided family. The Division Bench held that it was easily understood that when there is a partition where one of the coparcener receives a lesser share than what was strictly due to him or he relinquishes or releases or disclaims his share for a lesser amount or completely, there will be a disposition in the light of the decision of the Supreme Court in CED v. Kantilal Trikamlal [1976] 105 ITR 92. However, since the deceased Trikamlal had only, by the said release deed, extinguished his right in the movable property of the Hindu undivided family, there was in fact no partition either national or severance of status or partition by metes and bounds. It was held that, unless there was a specific provision in the said Act, like section 39(1), making a departure from the general principles of Hindu law, the principles of Hindu law would continue to apply. It was held that, when an actual partition takes place, it is clear that the share of the disponer in the property becomes known and vested and the value of that share can be very easily ascertained as at the date of disclaimer or release. However, when it came to an inchoate right such as the right of a coparcener to demand a partition and, on such demand, to obtain his legitimate share in the joint family property, the question that one has to ask oneself is, how can such a right be valued at all ? It was held that, in the absence of any provision in Explanation 2 to section 2(15) enacting either expressly or by necessary implication any notional partition as has been provided in section 39(1) of the Act, it must be held that though there was a release of an inchoate right inasmuch as it cannot be said to be a disposition of property within the meaning of Explanation 2 to section 2(15) of the Act. It was held that it, for some reason, the value cannot be fixed, then the provisions of the Estate Duty Act will fail because of the impossibility of correct valuation. It was further held that it is obvious that, so far as the release of the type made by the deceased Trikamlal is concerned, though it is a disclaimer of an inchoate right, yet it is not “disposition of property” because, from the very nature of things and the basic principle of Hindu undivided family at the time of the release. It was, therefore, held that unless it is possible to arrive at the valuation of that right which was being released or disclaimed by the deceased, it is not possible to say that it was property which was being disposed of looking to the provisions of Explanation 2 to section 2(15) of the said Act. The Division Bench, therefore held in respect of the same release deed, which is under consideration in the present case also, that the release of his right, title and interest under the registered deed dated January 29, 1964, though amounting to an extinguishment of his right, was not ‘disposition of property’ under Explanation 2 to section 2(15) of the Act since, at the time of executing the release deed, the property was not partitioned and his share had not become defined.
4. We may now turn to some relevant provisions of the Act for appreciating the question whether release of his undefined share by a coparcener in the joint family property can amount to a disposition or not. Section 5 of the said Act provides for levy of estate duty and inter alia, lays down that the estate duty at the rates fixed in accordance with section 35 of the Act is to be levied and paid upon the principal value of all property, settled or not settled, which passes on the death of a person. Sub-section (15) of section 2 defines property, inter alia so as to include any interest inter alia, provides that the expression “property” shall include the benefit conferred by the extinguishment at the expense of the deceased of a debt or other right which shall be deemed to have been a disposition made by the deceased in favour of the person for whose benefit the debt or right was extinguished. Section 7(1), inter alia, provides that 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 a joint family property of a Hindu family. Section 9(1), inter alia, provides that 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. Under section 27 of the Act, it is, inter alia, laid down that any disposition made by the deceased in favour of a relative of his shall be treated for the purposes of the Act as a gift. The provisions of the section 2(15) Explanation 2, sections 5, 7, 9(1), 27(1), and 39 came to be considered by the Supreme Court in CED v. Kantilal Trikamlal [1976] 105 ITR 92. The Supreme Court found that Explanation 2 to section 2(15) was deliberately designed to take into its embrace what otherwise may not be disposition. It was also found that the expression “other right” occurring in the said Explanation is of the widest import. The Supreme court approvingly referred to green’s construction of the identical expression in the English Act in section 45(2) and quoted from Green’s death duties, seventh edition, Butterworths, page 149, the following passage (see [1976] 105 ITR 92, 103) :
“A disclaimer is an extinguishment of a right for this purpose. Although in the event the person disclaiming never has any right in the property, he has the right to obtain it : this inchoate right is a ‘right’ for the purpose of section 45(2). The ejusdem generis rule does not apply to the words ‘ a debt or other right’ and the word right is a word of the widest import. Moreover, the expression, ‘at the expense of the deceased’ is used in an ordinary and natural manner; and is apt to cover not only cases where the extinguishment involves a loss to the deceased of a benefit he already enjoyed, but also those where it prevents him from acquiring the benefit …The extinguishment of a right may also cover the release of his interest by one joint tenant in favour of another”.
5. The Supreme Court then held that the following passage in Valliammai Achi v. CED [1969] 73 ITR 806 in the judgment of the Madras High Court expressed the correct view (at page 105) :
“The facts of this case, in our opinion, seems to square with the second Explanation to section 2(15). That, no doubt, is an Explanation to the inclusive definition of property. But the language of it seems to go further and coins a deemed disposition in the nature of a transfer. The mechanics of the transfer for the purpose of Explanation 2 consist in the extinguishment at the expense of the right so given up in favour of the person benefited. Transfer in a normal sense and as understood with reference to the Transfer of Property Act connotes a movement of property or interest or right therein or thereto from one person to another in present. But in the kind of disposition contemplated by the second explanation, one can hardly trace such a transfer because by the mere fact of extinction of a certain right of the deceased which does not involve a movement, a benefit is created in favour of the person benefited thereby. In the present case the son who was a quondam coparcener had a pre-existing right to every part of the coparcenary property, and of by a partition or a relinquishment on the part of one or more of the coparcener, the joint ownership is severed in favour of severalty, the process, having regard to the peculiar conception of a coparcenary, involves no transfer… But Explanation 2 is concerned not with that kind of situation, but an extinguishment of a right and creation of a benefit thereby and this process is statutorily deemed to be a disposition which is in the nature of a transfer.”
6. It will be noticed that, in Valliammai Achi [1969] 73 ITR 806 (Mad), no partition was effected but the deceased, in consideration of Rs. 5,000 received from his son, relinquished his share in the properties of the joint family. The Supreme Court held that the decision of the Gujarat High court which was under consideration before it had gravitated towards the narrower construction of “disposition” and “or right” and made no specific reference to the classic observations of Jenkins L. J. in Stratton’s Disclaimer, In re [1958] 34 ITR (ED) 47; 3 EDC 830 (CA), to the effect that, in the absence of any restriction, the word “right” is a word of the widest import. The Supreme Court (see [1976] 105 ITR 92) disagreed with the reasoning underlying the Gujarat judgment, Kantilal Trikamlal v. CED [1969] 74 ITR 353, to the effect that the partition does not involve a transfer and, therefore, cannot be a disposition and held that three hypotheses, namely, (1) the existence of the right, (2) its extinguishment, and (3) its extinguishment at the expenses of the deceased, are injected in the definition of disposition and the fictional expansion covers the diminution in the share taken by the coparcener and augmentation of the share taken by the other and impresses the stamp of property on this process by the “deeming” provision. The Supreme Court held that this conclusion was strengthened by the provision of sections 9 and 27 of the said Act. The Supreme Court also referred to the decision in Grimwade v. Federal Commissioner of Taxation [1949] 73 CLR 199 (Australia), dealing with the expression “disposition of property” in which it was observed that, “where there is a transfer of value from any property of that person to the property of that person to the property of another person, the conditions of liability are satisfied.” Finally, illustrating its holding, the Supreme Court observed, “If a is entitled to a moiety in property worth rupees five lakhs (or let us assume that mush of cash in the till belongs jointly to A and B) and by a partition, relinquishment, disclaimer or otherwise, A accepts somethings substantially less than his due, say rupees one lakh as against rupees two-and-a-half lakhs and the remainder goes to the benefit of B who gets four lakhs as against two-and-a-half lakhs, common sense, concurrently with Explanation 2, draws the inference that a has made over at his expense and to the benefit of B, a sum of rupees one-and-a-half lakhs which may be designated a ‘disposition’ by him in favour of B”. On a careful reading of the decision of the Supreme Court in Kantilal Trikamlal’s case [1976] 105 ITR 92, we do not find that the ratio of the decision was meant to be confined to cases where there was a partition. The ratio clearly apples even to cases where there is a disposition by relinquishment of interest as ins the instant case. Trikamala had, admittedly, a share in the property of the Hindu undivided family and, by the release deed, he extinguished his share in the movable properties of the Hindu undivided family. It cannot be gainsaid that this extinguishment was at the expense of the deceased Trikamlal and the releasees Manigauri and Babulal who were his wife and son had benefited from such extinguishment of his right. The triple hypothesis indicated by the Supreme Court in Kantilal Trikamlal’s case [1976] 105 ITR 92 is clearly satisfied where a coparcenary releases his interest to which extent there takes place a diminution in his share in the coparcenary property and a corresponding increase in the interest of others in whose favour the interest is relinquished. Therefore, there was a disposition by Trikamlal within the meaning of Explanation 2 to section 2(15) in favour of these two persons who were his relatives. By the release deed, Trikamlal who had a pre-existing right in the movable properties of the coparcenary had relinquished the joint ownership in respect of this movable property was severed by the release deed and there was an extinguishment of his right in respect of the movable property and a creation of a benefit thereby which, according to us, was deemed to be a disposition of property within the meaning of Explanation 2 to section 2(15) of the Act. We are, therefore, of the view that the decision of this court in CED v. Babubhai T. Panchal [1982] 133 ITR 455 holding that the relinquishment by a coparcener of his undefined share in the coparcenary property was not a disposition of property within the meaning of Explanation 2 to section 2(15) read with Explanation 2 of the said Act and of sections 5, 7, 9, 27 and 39 would clearly cover cases of relinquishment of rights by coperceners which is, by virtue of section 27, considered as a gift within the meaning of section 9, if made during the period specified and amounts to a disposition of property which is deemed to pass on death and is, accordingly, eligible to estate duty.
7. The valuation of interest in the passing on the death of a coparcener by virtue of gifts or dispositions treated gifts under section 9(1), can also be worked out in the manner provided in section 39. Section 39(1) deals with valuation of interest in coparcenary property ceasing on death and when a gift is made which is a disposition deemed to pass on the death of the deceased under section 9(1), the same criteria for valuation can be applied. There is no warrant for any distinction as is attempted in CED v. Babubhai T. Panchal [1982] 133 ITR 455 (Guj), between Explanation 2 to section 2(15), as has been provided in section 39(1) of the Act. As seen earlier, the emphasis of Explanation 2 to section 2(15) of the Act and section 39(1) of the Act on the ground that no notional partition is provided for in Explanation 2 to section 2(15), as has been provided in section 39(1) the Act. As seen earlier, the emphasis of Explanation 2 to Section 2(15) of the Act is on the point that the expression “property” shall included the benefit conferred by extinguishment of a right at the expense of the favour of the person for whose benefit the right was extinguishes. We, therefore, hold that the Tribunal was not right when it held that, in view of the release deed dated January 29, 1964, Trikamlal who died on March 3, 1964, had no share in the said movable property which could, on his with section 27 read with Explanation 2 to section 2(15), the underfined share in movable property sought to be released by Trikamlal under the release deed dated January 29, 1964, was required to be treated as a gift for the purposes of this Act and the said disposition made by the deceased Trikmalal within two years before his death in favour of the releasees, Manigauri and Babulal. We, therefore, answer question No. 2, for the reasons indicated above, in the affirmative and against the accountable person.
8. In the present case, the release deed of the interest of Trikamlal in the movable property was made in favour of his wife, Manigauri and son, Babulal, and the validity of the release deed was never questioned by anyone. Therefore, we are not operate in favour of Manigauri though it was executed in favour of both these relatives. The case of the accountable person was that, since Trikamlal had already disposed of his one-third interest in the movable property of the movable property of the Hindu undivided family by making the release deed, Manigauri inherited no share in it on his death and no part of it could therefore pass on her death as her property. Whether the share of Trikamlal in movable property went to Manigauri and Babulal under that release deed on January 29, 1964, or had passed on his death on March 3, 1964, the result will, however, be the same because the interest of the deceased Trikamlal in the said coparcenary property either was deemed to have passed on the death of Trikamlal under section 9 read with section 27 of the Act since the release deed was made within two year prior to his death or had devolved on these two person by succession in equal shares in view of the privacy to section 6 read with section 8 of the Hindu Succession Act. Therefore, one-third share in the,movable property of Trikamlal was taken in equal shares by Manigauri and Babulal on the death of Triamlal. Therefore, Manigauri had only one-sixth share in the movable property which came to her on the death of Trikamlal. The property was, admittedly, coparcenary property and no partition had taken place. Therefore, only one-sixth share which came to Manigauri either under the disposition or by succession on the death of her husband was the portion that could pass on her death. The Assistant Controller of Estate Duty and the Appellate Controller were, therefore, right in holding that Manigauri had one-sixth share in the said property that had passed on her death. We, therefore, answer question No. 1 in the negative. As held by the Tribunal, only one-sixth share in the movable property was included by the Assistant Controller as confirmed by the Appellate Controller for computing the principal value and the finding of the Tribunal has not worked to the disadvantage of the accountable person. We, therefore, answer the reference accordingly.
9. The reference stands disposed of with no order as to costs.