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ESTATE DUTY ACT, 1953
34 of 1953
STATEMENT OF OBJECTS AND REASONS "The object of the Bill is to impose an estate duty on property passing or deemed to pass on the death of a person. Though the levy and collection of income-tax at high rates since the War and the investigations undertaken by the Income-tax Investigation Commission in a number of important cases of tax evasion have, no doubt, prevented to some extent the further concentration of wealth in the hands of those who are already wealthy, yet these do not amount to positive steps in the direction of reducing the existing inequalities in the distribution of wealth. It is hoped that by the imposition of an estate duty such unequal distributions may be rectified to a large extent. Such a measure would also assist the States towards financing their development schemes. In their draft outline Report, the Planning Commission have, it will be recalled, stressed the necessity of undertaking legislation to levy death duties in India as early as possible. 2. A Bill seeking to impose such a duty was first introduced in 1946 and then reintroduced in the provisional Parliament in 1948. The latter Bill after being considered by the Select Committee lapsed on the dissolution of that Parliament. The present Bill is practically a reproduction of that Bill as reported by the Select Committee, but certain changes have been made, which are as follow (1) When the earlier Bill was drafted, the Centre had no jurisdiction to legislate in respect of agricultural land, but now some States have passed the necessary resolutions under Article 252 of the Constitution, and the Bill therefore applies also to agricultural lands in such States. As and when the remaining States pass the necessary resolutions, the Schedule will be amended by a Notification of the Central Government to include such States. (2) In respect of the movable property of the deceased, the levy of duty will depend upon his domicile only. The alternative basis of residence in the Bill as amended by the Select Committee has been omitted. (3) As in the case of Income-tax law, the fixation of the rates of duty and of the maximum limits of exemption will be regulated by the annual Finance Acts. (4) For the sake of administrative convenience, the power to assess duty is assigned to the Controller of Estate Duty, a new authority which will function under the Central Board of Revenue. (5) Appeals from the orders of the Controller of Estate Duty will lie to the Central Board of Revenue, and, as in Income-tax Act, 1922, references to the High Court may be made on questions of law. 3. Under Article 269 of the Constitution the net proceeds of the estate duty will be assigned to the States on such principles of distribution as Parliament may hereafter formulate. The appropriate estate duty on agricultural land situate in a State will, of course, be assigned to that State."- Gaz. of Ind., 16-8-1952, Pt. II, Sec. 2, p. 422. Act 31 of 1982 This Bill seeks to amend the Estate Duty Act, 1953 mainly with a view to providing certain concessions in relation to estate duty. 2. One of the amendments proposed seeks to raise the exemption- limit of estate duty from Rs. 50,000 to Rs. 1,50,000. The rate of estate duty in the first slab of estate range of Rs. 1,50,001 to Rs. 2,00,000 will be 10 per cent i.e., the same rate as is applicable at present in the estate range of Rs. 1,00,001 to Rs. 2,00,000. The rate schedule 'of estate duty is proposed to be recast accordingly. 3. Under another amendment, the value of one residential house belonging to the deceased would, for purposes of estate duty, be taken at the same value as determined by the Wealth-tax Officer for the purposes of assessment of the net wealth of the deceased on the valuation date immediately preceding the date of death of the deceased. Where the value of such house is not so included in the net wealth of the deceased, its value would be determined by the Controller in accordance with the provisions contained in the Wealth-tax Act and the rules made thereunder. 4. Another amendment seeks to make a provision similar to that contained in Income-tax Act, 1961 and Wealth-tax Act, 1957, to secure that where the deceased was a member of a co-operative housing Society the value of one house or part thereof allotted or leased to him under a house-building scheme of the society would be treated as a house owned by the deceased, thus qualifying for the concessional treatment accorded to residential house property. 5. The other amendments proposed in the Bill are of a consequential nature. 6. The amendments are being made with retrospective effect from the 1st day of March, 1981 and accordingly the proposed concessions will also be available in relation to estate duty in the case of persons who have died after the 28th February, 1981. 7. The Bill seeks to achieve the above objects. -Gaz. of Ind., 13-7-82, Pt. II, S. 2,Ext" p. 8 (No. 28) Act 53 of 1984 This Bill seeks to amend the Estate Duty Act, 1953, mainly with a view to excluding agricultural lands from the levy of estate duty. 2. One of the amendments proposed accordingly seeks to provide that the Act shall cease to apply to the levy of estate duty in respect of agricultural land. 3. Another amendment seeks to omit clause (b) of sub-section (1) of section 34 of the Act, which provides for. aggregation, for the purpose of determining the rate of estate duty, of agricultural land, situate in any State in respect of which estate duty under the Act is not leviable. . 4. Under another amendment, the rule-laying formula contained in section 85 of the Act is being revised to conform to the model formula recommended by the Committees on Subordinate Legislation of both the Houses of Parliament. 5. By another amendment, it is proposed to provide that all the proposed amendments will come into force in the States of Assam. Bihar, Gujrat Haryana,Himachal Pradesh, Kerala, Madhya Pradesh, Maharashtra, Meghalaya, Orissa and Tamil Nadu and in all the Union territories on the expiration of two months from the date on which the Bill receives the assent of the President; and in respect of the other States, on the expiration of four months from the date of adoption of the proposals for such amendments or the amendments, as the case may be, by those States under clause (1) of article 252 of the Constitution. 6. The Bill seeks to achieve the above objects. -Gaz. of Ind., 24-7-84, Pt. II S. 2, Ext" p. 3 (No. 35). Act 52 of 1985 In the Budget Speech, an announcement was made of the decision of Government to abolish the levy of estate duty in respect of estates passing on deaths occurring on or after the'16th day of March 1985. This Bill is in pursuance of that assurance. 2. The new section proposed in clause 2 of the Bill seeks to provide that the Estate Duty Act, 1953 shall cease to apply to the levy of estate duty in respect of any property (other than agricultural land) which passes on the death of any person on or after the 16th day of March, 1985. 3. As regards levy of estate duty on agricultural land, it may be mentioned that the Estate Duty Act does not apply to the levy of estate duty in respect of agricultural lands situate in all the Union territories, and all the States except the States of Andhra Pradesh, Karnataka,Manipur, Nagaland Punjab and Tripura. It is proposed in due course to introduce another Bill to provide for the abolition with effect from the 16th March, 1985, of the levy of estate duty in respect of agricultural lands situate in these States after the passing by the Legislatures of at least two of these States, of resolutions in that behalf under article 252 of the Constitution. -Gaz. of Ind., 22-8-85, Pt. II, S. 2, Ext" p. 10 (No. 48) Act 49 of 1986 The Estate Duty Act, 1953 has ceased to apply to the levy of estate duty in respect of any property (other than agricultural lands) which passes on the death of any person on or after the 16th day of March, 1985. The Estate Duty Act has also ceased to apply to the levy of estate duty in respect of agricultural lands situate in all the Union territories, and all the States except the States of Nagaland, Punjab and Tripura from various dates specified in the Act. The State Legislatures of Punjab and Tripura have passed resolutions under article 252 of the Constitution that the levy of estate duty in respect of agricultural lands situate in those States passing on the death of the persons occurring on or after the 16th March, 1985 should be discontinued.. 2. The Bill seeks to amend the Estate Duty Act to achieve the above object. -Gaz. of Ind., 12-8-86, Pt. II, S. 2, Ext" p. 2 (No. 35). An Act to provide for the levy and collection of an estate duty. Be it enacted by Parliament as follows
PART 1: PRELIMINARY:
SECTION: Short title, extent and commencement:
(1) This Act may be called the Estate Duty Act, 1953.
(2) It extends to the whole of India [* * *].
(3) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.
SECTION 2: Definitions:
In this Act, unless the context otherwise requires,,- .
(1) "affidavit of valuation" means the affidavit of valuation made under (S.191 of the Court-fees Act, 1870), in: connection with an application for the grant of representation;
[(1-A) "Appellate Controller" means a person appointed to be an Appellate Controller of Estate Duty under (section 4);
(1-B) "Appellate Tribunal" means the Appellate Tribunal appointed under (S.5A of the Indian Income-tax Act, 1922);]
[(2) "Board" means the Central Board of Direct Taxes constituted under
;]
(3) "company" includes any body corporate wheresoever incorporated;
(4) "controller company" means a company as defined in (section 17);
(5) "Controller" means a person appointed to be a. Controller of Estate Duty under
and includes a person appointed to be a Deputy Controller of Estate Duty or an Assistant Controller of Estate Duty;
(6) "deceased person" and "the deceased" mean a person dying after the commencement of this Act;
(7) "estate duty" means estate duty under this Act;
(8) "executor" means the executor or administrator of a deceased person;
(9) "general power" includes every power of authority enabling the donee or other holder thereof to appoint or dispose of property as thinks fit, whether exercisable by instrument inter vivos or by will. or both, but exclusive of any power exercisable in a fiduciary capacity under a disposition not made by himself or exercisable as mortgagee;
[(9A) "High Court", in relation to the Union Territories-of Dadra and Nagar Haveli and Goa, Daman and Diu, means the Bombay High Court]
(10) "incumbrances" includes mortgages and terminable charges;
(11) "interest in expectancy" includes an estate in remainder or reversion and every other future interest whether vested or contingent, but does not include reversions expectant upon the determination of leases;
(12) "legal representative" means a person who in law represents the estate of a deceased person, and includes - (i) an executor, (ii) as regards any obligation under this Act, any person who takes possession of, or intermeddles with, the estate of a deceased person or any part thereof, and (iii) where the deceased was a coparcener of a Hindu family, the manager for the time being of the family;
[(12-A) "person accountable" or "accountable person" means the person accountable for estate duty within the meaning of this Act, and, includes every person in respect of whom any proceeding under this Act has been taken for the assessment of the principal value of the estate of the deceased;]
(13) "power to appoint property" means power to determine the disposition of property of which the person invested with the power is not the owner;
(14) "prescribed" means prescribed by rules made under this Act;
[(14-A) "principal officer", in relation to a company or a corporation established by a Central, State or Provincial Act, means the manager, managing director, managing agent or secretary, and includes any person connected with the management of the company or corporation upon whom the Controller has served a notice of his intention of treating him as the principal officer for the purposes of this Act;]
(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 converted from one species into another by any method;
(16) "property passing on the death" includes property passing either immediately on the death or after any interval, either certainly or contingently, and either originally or by way of substitutive, limitation, and "on the death" includes "at a period ascertainable only by reference to the death";
(17) "public charitable purpose" includes relief of the poor, education, medical relief and the advancement of any other object of general public utility within the territory of India,
(18) "representation" means probate of a will or letters of administration;
(19) "settled property" means property which stands limited to, or in trust for, any persons, natural or juridical, by way of succession, whether the settlement took effect before or after the commencement of this Act; and "settlement" means any disposition including a dedication or endowment, whereby property is settled;
(20) "Valuer" means a Valuer appointed under (section 4).
SECTION 3: Interpretation:
(1) For the purposes of this Act,- (a) a person shall be deemed competent to dispose of property if he has such an estate or interest therein or such general power as would, of he were sui juris, enable him to dispose of the property; (b) a disposition taking effect out of the interest of the deceased shall be deemed to have been made by him, whether the concurrence of any other person was or was not required; (c) money which a person has a general power to charge on the property of another person shall be deemed to be an interest in that property of which the former has power to dispose; (d) the domicile of a person shall be determined as if-the provisions of (Succession Act, 1925), on the subject applied to him; [and as if the Union territories of Dadra and Nagar Haveli, Goa, Daman and Diu, and Pondicherry had always been parts of India.] .
(2) In Parts II and III of this Act, any reference to any interest disposed of, policy of insurance effected, annuity or other interest purchased or provided or to any gift, settlement, disposition or transfer of property made, shall be construed as including any such interest, policy, annuity, gift, settlement, disposition or transfer, as the case may be, whether it was disposed of, effected, purchased or provided, or made before or after the commencement of this Act.
[(3) For the avoidance of doubt, it is hereby declared that references in this Act to property passing on the death of a person shall be construed as including references to property deemed to pass on the death of such person.]
[(4) Any reference in (section 9), (Rule 11) and (Rule 33) to public charitable purpose or purposes in ': relation to a gift made or disposition or determination of an interest effected or suffered on or- after the 1st day of April, 1964 shall be construed as not including a purpose the whole, or substantially the whole of which is of a religious nature.]
SECTION 4: Estate duty authorities:
Provided that, subject to such rules as may be made by the Board in this behalf, every Controller within the local limits of whose jurisdiction any part of the estate of the deceased is situated, may exercise in relation to the whole estate or any part thereof any of the powers conferred on the Controller by this Act: Provided further that the Board may, by general or special order,, direct that any Controller specified by it in this behalf may exercise all or any of the powers conferred on the Controller by this Act to the exclusion of any other Controller. [Provided that no such orders, instructions or directions shall be given by the Board so as to interfere with the discretion of the Appellate Controller of Estate Duty in the exercise of his appellate functions.]
(1) There shall be the following authorities for the purposes of this Act, namely (a) the Board (b) Controllers of Estate Duty. [(bb) Appellate Controllers of Estate Duty.] (c) Valuers.
(2) The Central Government may appoint as many Controllers of Estate Duty as it thinks fit and they shall, subject to the control of the Board, perform their functions in respect of such estates or classes of estates and such areas as are assigned to them by the Board.
[(2A) The Central Government may appoint as many Appellate Controllers of Estate Duty as it thinks fit and they shall, subject to the control of the Board, perform their functions in respect of such estates or classes of estates or such areas as the Board may direct, and where such directions have assigned to two or more Appellate Controllers, the same estate or classes of estates or the same area, they shall perform their functions in accordance with any orders which the Board may make for the distribution and allocation of the work to be performed.]
(3) The Central Government shall, within twelve months after the commencement of this Act and may thereafter, from time to time, appoint a sufficient number of qualified persons to act as Valuers for the purposes of this Act and shall fix a scale of charges for the remuneration of such persons.
(4) Subject to the rules and orders of the Central Government regulating the conditions of service of persons in public services and posts, a Controller may appoint such executive or ministerial staff as may be necessary to assist him in the execution of his functions.
(5) All officers and persons employed in the execution of this Act, other than Valuers, shall observe and follow the orders, instructions and directions of the Board.
PART 2: IMPOSITION OF ESTATE DUTY:
SECTION 5: Levy of estate duty:
(1) In the case of every person dying after the commencement of this Act, there shall, save as hereinafter expressly provided, be levied and paid upon the principal value ascertained as hereinafter provided of all property, settled or not settled, including agricultural land situate in [territories which, immediately before the 1 st November, 1956, were comprised in the States] specified in the First Schedule to this Act, [and in the Union territories of Dadra and Nagar Haveli, Goa, Daman and Diu, and Pondicherry,] which passes on the death of such person, a duty called "estate duty" at the rates fixed in accordance with (section 35).
(2) The Central Government may, by notification in the Official Gazette, add the names of any other States to the First Schedule in respect whereof resolutions have been passed by the Legislatures of those States adopting this Act under clause (1) of (Artilce 252) of the Constitution in respect of estate duty on agricultural lands situate in those States, and on the issue of any such notification the States so added shall be deemed to be States specified in the First Schedule within the meaning of sub-section (1).
SECTION 5A: Application in respect of estate duty on agricultural lands of Acts amending this Act:
[Provided that where in respect of any part of the territories comprised in any of the said. States the resolution of the Legislature concerned under clause (1) of (Article 252) of the Constitution was passed subsequently to the date on which the said amendments would otherwise have taken effect by virtue of the foregoing provision, the said amendments shall, in respect of estate duty on agricultural lands in that part of the said territories, be deemed to have taken effect only on the date on which this Act became applicable to estate duty in respect of agricultural lands.
(1) The amendments made to this Act by: (Finance Act, 1954), (ii) (Taxation Laws (Extension to Jammu and Kashmir) Act, 1954), and (iii) the Repealing and Amending Act, 1957 shall apply, and shall be deemed to have applied, to estate duty in respect of agricultural lands situate in the territories comprised in the States, except those in the States of West Bengal and Jammu and Kashmir, but including those in the transferred territories, on and from the dates on which the amendments made by each of the amending Acts aforesaid respectively took effect:
(2) The amendments made to this Act by the Estate Duty (Amendment) Act, 1958, shall also apply to the levy of estate duty in respect of agricultural lands situate in the territories comprised in the States except those in the States of [* * * *] West Bengal and Jammu and Kashmir.
[(2A) The amendments made to, or in relation to, this Act by - (i) (Central Boards of Revenue Act, 1963), (ii) (Finance Act, 1964), (iii) (Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1964), (iv) the Direct Taxes (Amendment) Act, 1964, (v) (Finance Act, 1965), (vi) (Finance (No.2) Act, 1965), (vii) (Taxation Laws (Miscellaneous Provisions) Act, 1965), and (viii) (Finance Act, 1966), shall apply, and shall be deemed to have applied, on and from the dates on which the amendments made by each of the Act aforesaid respectively took effect, to estate duty in respect of agricultural lands situate in the territories comprised in - (a) the States of Gujarat, [Tamil Nadu,] Maharashtra and Rajasthan; and (b) any other States which the Central Government may, by notification in the Official Gazette, specify in this behalf after resolutions have been passed by the Legislatures of those States adopting the said amendments under clause (1) of (Article 252) of the Constitution.]
[(2B) The amendments made to this Act by (section 3) to (section 6) of the Estate Duty (Amendment) Act, 1982, shall apply, and shall be deemed to have applied, on and from the 1st day of March, 1981, to estate duty in respect of agricultural lands situate in the territories comprised in - (a) the States of Bihar, Gujarat, Haryana, Himachal Pradesh, Madhya Pradesh. Maharashtra, Orissa and Tamil Nadu; and (b) any other States which the Central Government may, by notification in the Official Gazette, specify in this behalf after resolutions have been passed by the Legislatures of those States adopting the proposals with respect to such amendments or the said amendments, as the case may be, under clause (1) of (Article 252) of the Constitution.]
[(2C) The amendments made to this Act by (section 3) to (section 5) of the Estate Duty (Amendment) Act, 1984, shall apply to estate duty in respect of agricultural lands situate in the territories comprised in - (a) the States of Assam, Bihar, Gujarat, Haryana, Himachal Pradesh, Kerala, Madhya Pradesh, Maharashtra, Meghalaya, Orissa and Tamil Nadu and all the Union Territories, on the expiration of two months from the date on which the said Act received the assent of the President, [* * *] [(aa) the States of Punjab and Tripura, on the 16th day of March, 1985; and] (b) any other States in respect whereof resolutions have been passed by the Legislatures of those States adopting the proposals with respect to such amendments or the said amendments as the case may be, underclause (1) of (Article 252) of the Constitution, on the expiration of four months from the date of such adoption.]
(3) This Act shall cease to apply to the levy of estate duty in respect of agricultural lands situate [* * * * * *1 in the transferred territories, and, notwithstanding anything contained in sub-section (1 ), shall be deemed to have so ceased on and from the 1st day of April, 1959.
SECTION 5B: Act to cease to apply to estate duty in respect of agricultural land:
[ Not- withstanding anything contained in (section 5), this Act shall cease to apply to the levy of estate duty in respect of agricultural land.]
Section 5C: Discontinuance of levy of estate duty:
[ Notwithstanding anything contained in (section 5), this Act shall cease to apply to the levy of estate duty in respect of any property (other than agricultural land) which passes on the death of any person on or after the 16th day of March, 1985.]
SECTION 6: Property within disposing capacity:
Property which the deceased was at the time of his death competent to dispose of shall be deemed to pass on his death.
SECTION 7: Interest ceasing on death:
(1) 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 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 the joint family . property of a Hindu family governed by the Mitakshara, Marumakkattayam or Aliyasantana . law.
(2) If a member of a Hindu coparcenary governed by the Mitakshara school of law dies, then the provisions of sub-section (1) shall apply with respect to the interest of the deceased in the coparcenary property only - (a) if the deceased had completed his eighteenth year at the time of his death, or (b) where he had not completed his eighteenth year at the time of his death, if his father or other male ascendant in the male line was not a coparcener of the same family at the time of his death.
(3) If a member of any tarward or tavazhi governed by the Marumakkattayam rule of inheritance or a member of a kutumba or kavaru governed by the Aliyasantana rule of inheritance dies, then the provisions of sub-section (1) shall not apply with respect to the interest of the deceased in the property of the tarwad, tavazhi, kutumba or kavaru, as the case may be, unless the deceased had completed his eighteenth year.
(4) The provisions of sub-section (l)shall not apply to the property in which the deceased or any other person had an interest only as holder of an office or recipient of the benefits of a charity or as a corporation sole.
SECTION 8: Gifts mortis causa:
Property taken as a gift made in contemplation of death shall be deemed to pass on the donor's death.
SECTION 9: Gifts within a certain period before death:
Provided that in the case of gifts made for public charitable purposes the period shall be six months.
(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:
[(2) The provisions of sub-section (1) shall not apply to- (a) gifts made in consideration of marriage, subject to a maximum of rupees then thousand in value; (b) gifts which are proved to the satisfaction of the Conroller to have been part of the normal expenditure of the deceased, subject to a maximum of rupees ten thousand in value.]
SECTION 10: Gifts whenever made where donor not entirely excluded:
Property taken under any gift, whenever made, shall be deemed to pass on the donor's death to the extent that bona fide possession and enjoyment of it was not immediately assumed by the donee and thence- forward retained to the entire exclusion of the donor or of any benefit to him by contract or otherwise: Provided that the property shall not be deemed to pass by reason only that it was not, as from the date of the gift, exclusively retained as aforesaid, if, by means of the surrender of the reserved benefit or otherwise, it is subsequently enjoyed the entire exclusion of the donor or of any benefit of him for at least [two years] before the death. [Provided further that a house or part thereof taken under any gift made to the spouse, son, daughter, brother or sister, shall not be deemed to pass on the donor's death by reason only of the residence therein of the donor except where a right of residence therein is reserved or secured directly or indirectly to the donor under the relevant disposition or under any collateral disposition.]
SECTION 11: Limited interests disposed of within a certain period before death:
(1) Subject to the provisions of this section, where an interest limited to cease on a death has been disposed of or has determined, whether by surrender, assurance, divesting, forfeiture or in any other manner (except by the expiration of a fixed period at the expiration of which the interest was limited to cease), whether wholly or partly, and whether for value or not, after becoming an interest in possession, and the disposition or determination in (or any of them if there are more than one) is not excepted by sub-section (2), then- (a) if, had there been no disposition or determination, as aforesaid of that interest and no disposition of any interest expectant upon or subject to that interest, the property in which the interest subsisted would have passed on the death under (Section 5), that property shall be deemed by virtue of this section to be included as to the whole thereof in the property passing on the death; or (b) if, had there been no disposition or determination as aforesaid of that interest and no disposition of any interest expectant upon or subject to that interest, the property in which the interest subsisted would have been deemed by virtue of (Section 7) to be included to a particular extent in the property passing on the death, the property in which the interest subsisted shall be deemed by virtue of this section to be included to that extent in the property passing on the death.
(2) Where a disposition or determination of an interest limited to cease on the death was bona fide effected or suffered not less than [two years] before the death (or, if it was effected or suffered for public charitable purposes, not less than six months before the death), the disposition or determination shall be expected by this sub-section- (a) if bona fide possession and enjoyment of the property in which the interest subsisted was assumed immediately thereafter by the person becoming entitled by virtue of or upon the disposition or determination and thenceforward retained to the entire exclusion of the person who immediately before the disposition or determination had the interest and of any benefit to him by contract or otherwise; or (b) in the case of a partial determination, if the conditions specified in the preceding paragraph were not satisfied by reason only of the retention or enjoyment by the deceased of possession of some part of the property, or of some benefit, by virtue of the provisions of the instrument under which he had the interest: Provided that where bona fide possession and enjoyment of the property referred to in clause (a) was not assumed immediately after the-disposition or determination of the interest limited to cease on death, the disposition or determination shall be excepted by this sub- section, if, by means of the surrender of the reserved shall benefit or otherwise, the property is subsequently enjoyed for at least [two years] before the death, to the entire exclusion of the person who immediately before the disposition or determination had the interest and of any benefit to him by contract or otherwise: [Provided further that where the disposition or determination of an interest limited to cease on the death in a house or part thereof was effected or suffered in favour of the spouse, son, daughter, brother or sister, then, the disposition or determination shall, notwithstanding the residence therein of the person who immediately before the disposition or determination had the. interest, be deemed to be excepted any this sub-section save where a right of residence therein is reserved or secured directly or indirectly to such person under the relevant disposition or under any collateral disposition :] Provided further that nothing in this sub-section shall be construed as affecting any charge of estate duty arising otherwise than by virtue of the provisions of the preceding sub-section.
(3) In the application of sub-section (1)to a case in which an incumbrance on the property in which the interest in question subsisted has been created by associated operations (as hereinafter defined in
) which included a disposition of that interest, references to that property shall be construed as references to that property free from the incumbrance, except in a case in which the incumbrance was created for consideration in money or money's worth which was applied for purposes calculated to maintain or increase the value of that property, and, in that case, shall be construed as references to that property subject to the incumbrance to the extent to which the consideration was so applied.
(4) Where an interest limited to cease on a death has been disposed of or has determined, bona fide possession and enjoyment of the property shall not be deemed for the purposes of sub-section (2) to be assumed immediately thereafter and thenceforward retained to the entire exclusion of a person who had the interest and of any benefit to him by contract or otherwise, if at any time thereafter he has a benefit by virtue of any operations associated with the disposition or determination, nor while he has such a beneit shall the property be deemed to be enjoyed to the entire exclusion as aforesaid for the purposes of the first proviso to sub- section (3).
(5) In the preceding sub-section- (a) the reference to any operations associated with the disposition shall be taken as referring to any associated operations as defined in (section 27), of which the disposition is one; and (b) the reference to any operations associated with the determination shall be taken as referring to any associated operations as so defined of which any disposition resulting in, or effected in contemplation of or with reference to, the determination is one.
SECTION 12: Settlements with reservation:
provided that the property shall not be deemed to pass on the settlor's death by reason only that any such interest or right was so reserved if by means of the surrender of such interest or right the property is subsequently enjoyed to the entire exclusion of the settlor and of any benefit to him by contract or otherwise, for at least [two years] before his death. [Provided further that a house or part thereof comprised in such settlement made in favour of the spouse, son', daughter, brother or sister, shall not be deemed to pass on the settlor's death by reason only of the residence therein of the settlor except where a right .of residence is reserved or secured directly or indirectly to the settlor under the settlement or under any collateral disposition:]
(1) Property passing under any settlement made by the deceased by deed or any other instrument not taking effect as a will whereby an interest in such property for life or any other period determinable by reference to death is reserved either expressly or by implication to the settlor or whereby the settlor may have reserved to himself the right by the exercise of any power, to restore to himself or to reclaim the absolute interest in such property shall be deemed to pass on the settlor's death :
(2) Notwithstanding anything contained in sub-section (1), where property is settled by a person on one or more other persons for their respective lives and after their death, on the settlor for life and thereafter on other persons and the settlor dies before his interest in the property becomes an interest in possession, the property shall not be deemed to pass on the settlor's death within the meaning of this section.
SECTION 13: Joint investments:
Where a person, having been absolutely entitled to any property or to the funds with which any property was purchased, has caused it to be transferred to or vested in himself and any other person jointly, whether by disposition or otherwise, either by himself alone, or in concert, or by arrangement, with any other person so that the beneficial interest in some part of that property passes or accrues by survivorship on his death to the other person, the whole of that property shall be deemed to pass on the death.
SECTION 14: Policies kept up for a donee:
Provided that any payments which were not made either out of property provided directly or indirectly by the deceased for the purposes of the settlement, or out of property representing that property, or out of income provided directly or indirectly by the deceased whether arising from such property or otherwise, shall not be treated as having been made by the deceased if the Controller is satisfied that those payments were not made as part of any reciprocal arrangements between the deceased and any other person.
(1) Money received under a policy of insurance effected by any person on his life, where the policy is wholly kept up by him for the benefit of a donee, whether nominee or assignee, or a part of such money in proportion to the premiums paid by him, where the policy is partially kept up by him for such benefit, shall be deemed to pass on the death of the assured.
(2) For the purposes of sub-section (1), so much of the premiums paid on any policy of insurance as was, by virtue or in consequence of a settlement made by the deceased, paid out of property, whether or not provided by the deceased, comprised in the settlement or out of income, whether or not provided by the deceased, comprised in the settlement or out of income, whether or not provided by the deceased, arising under the settlement, shall be treated .as having been paid by the deceased:
(3) For the purposes of this section,- (a) the expression "settlement" includes any disposition, trust, covenant, agreement or arrangement; and (b) a person shall be deemed to have made a settlement if he has made or entered into the settlement directly or indirectly, and in particular (but without prejudice to the generality of the foregoing words of this clause) if he has provided or undertaken to provide funds directly or indirectly for the purposes of the settlement, or has made with any other person a reciprocal arrangement for that other person to make or enter into the settlement. [Cf: United Kingdom Finance Act, 1894 (57 and 58 Vic., c. 30), S. 2(l)(c) and (1948), S 76]
SECTION 15: Annuity or other interest purchased or provided by the deceased:
Any annuity or other interest, purchased or provided by the deceased, either by himself alone or in concert, or by arrangement with any other person shall be deemed to pass on his death to the extent of the beneficial interest accruing or arising, by survivorship or otherwise, on his death.
SECTION 16: Annuity or other interest purchased or provided out of property derived from the deceased:
Provided that for the purpose of determining whether there would have been any such insufficiency as aforesaid, and the extent thereof, there shall be excluded from the property derived from the deceased any part thereof as to which it is proved to the satisfaction of the Controller that the disposition of which it, or the property which it represented, was the subject-matter, was not made with reference to, or with a view to enabling or facilitating, the purchase or provision of the annuity or other interest, or the recoupment in any manner of the cost thereof. (1) (Section 15) shall have effect in relation to any annuity or other interest that was purchased or provided wholly or in part by any person who was at any time entitled to, or amongst whose resources there was at any time included, any property derived from the deceased, as if that annuity or other interest had been provided by the deceased, or, if it is proved to the satisfaction of the Controller that the application of all the property derived from the deceased would have been insufficient to provide the whole of that annuity or other interest, as if a similar annuity or interest of an amount reduced to an extent proportionate to the insufficiency proved had been provided by the deceased :
(2) In this section the following expressions have the meanings hereby assigned to them respectively, namely (a) "property derived from the deceased" means any property which was the subject- matter of a disposition made by the deceased, either by himself alone or in concert or by arrangement with any other person, [notwithstanding that the disposition was made for full consideration] in money or money's worth paid to him for his own use or benefit, or which represented any of the subject-matter of such a disposition, whether directly or indirectly, and whether by virtue of one or more intermediate dispo
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