An Act to provide for the levy and collection of an estate duty.
BE it enacted by Parliament as follows:.-
Section 1. Short title, extent and commencement
(1) This act may be called the Estate Duty act, 1953.
(2) It extends to the whole of India except the State of Jammu and Kashmir.
(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 section 19-1 of the Court-fees act, 1870 (VII of 1870), in connection with an application for the grant of representation;
(2) "Board" means the Central Board of revenue constituted under the Central Board of Revenue Act, 1924 (IV of 1924) ;
(3) "company" includes anybody corporate wheresoever incorporated;
(4) "controlled company" means a company as defined in section 17:
(5) "Controller" means a person appointed to be a Controller of Estate Duty under section 4 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" means 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 or authority enabling the done or other thereof to appoint or dispose of property as he 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;
(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;
(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.
(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;
Explanation1.- The creation by a person or with his consent of a debt or other right enforceable against him personally or against property which he was or might become competent to dispose of or to charge or burden for his own benefit, shall be deemed to have been a disposition made by that person, and in relation to such a disposition the expression " property" shall include the debt or right created.
Explanation 2.- The extinguishment at the expense of the deceased of a debt or other right 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, and in relation to such a disposition the expression "property" shall include the benefit conferred by th extinguishment of the debt or right;
(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 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 judicial 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, if 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 no 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 the Indian Succession Act, 1925 (XXXIX of 1925) on the subject applied to him.
(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 provided or to any gift settlement, disposition or transfer of property made, shall be constructed as including any such interest, policy, annuity, it, settlement,, disposition or transfer, as the case may be, whether it disposed of, effected, purchased or provided, or made before or after the commencement of this Act.
Section 4. Estate duty authorities
(1) There shall be the following authorised for the purposes of this Act, namely :.-
(a) the Board,
(b) Controllers of Estate Duty.
(2) The Central government may appoint as many Controllers of state 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 states and such areas as are assigned to them by the Board :
Provided that, subject to such rules as may be made by the Board in the behalf, ever Controller, within the local limits of whose jurisdiction of any part of the estate of the deceased is situated, may exercise in ...........to the whole estate or any part thereof any of the powers con......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.
(3) The Central Government shall, within twelve months after the commencement of this Acts and may thereafter, from time to time, appoint a sufficient number of qualified persons to act as Valuers for the purpose 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.
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 expressed provided, be levied and paid upon the principal value ascertained hereinafter provided of all property, settled or not settled, including agricultural land situate in the States specified in the first Schedule of this Act, 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 article 252 of the constitutions 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 the section (1).
Section 6. Property within disposing capacity
Property which the decease was at the time of his death competent to dispose of shall be deemed pass on his death.
Section 7. Interests ceasing on death
(1) subject to the provisions of the section, property in which the deceased or any other person had interest ceasing on the death of the deceased shall be deemed to pass the deceased's death to the extent to which a benefit accrues or area 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 Mitaksha 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.
Explanation.- Where the deceased was also a member of a sub.- coparcenary (within the coparcenary) possessing separate property of its own, the provisions of this sub-section shall have effect separately in respect of the coparcenary and the sub- coparcenary.
(3) If a member of any tarwad or tavaahi 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 (1) 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.
Explanation.- For the removal of doubts, it is hereby declared that the holder of Sthanam is neither the holder of an office not a corporation sole within the meaning of this sub-section.
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.
Explanation -.In this section, the expression "gift made in contemplation of death" has the same meaning as in section 191 of the Indian succession Act, 1925, (XXXIX of 1925) .
Section 9. Gifts within a certain period before death
(1) Property taken under the disposition made by the deceased purporting to operate as an immediate gift inter vivas 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:
Provided that in the case of gifts made for public charitable purposes the period shall be six months.
(2) The provisions of sub-section (1) shall not apply to gifts made in consideration of marriage or which are proved to the satisfaction of the Controller to have been part of the normal expenditure of the deceased, but not exceeding rupees five thousand in the aggregate.
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 thenceforward 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, it is subsequently enjoyed to the entire exclusion of the donor or of any benefit to him for at least two years before the death.
Section 11. Limited interests disposed of within a certain period before death
(1) subject to the provisions of this Section, whether 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 (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 including 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 of the death.
(2) Where a disposition or determination of an interest limited that 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 excepted 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 but 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 provision 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 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 of determination had the interest and of any benefit to him by contract of otherwise:
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 income branch on the property in which the interest in question subsisted has been created by associated operations (as hereinafter defined in section, 25 which included a disposition of that interest, reference to that property shall be construed as reference 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 the property, and, in that case, shall be construed as reference 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 virtue of any operations associated with the disposition or determination, nor while he has such a benefit shall the property be deemed to be enjoyed to the entire exclusion as aforesaid for the purposes of the first proviso to sub-section (2) .
(5) In the preceding sub-section .-
(a) the reference to any operation 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 operation associated with the determination shall be taken as referring to any associated operations as so defined of which any disposition resulting in, or effect in contemplation of or with reference to, the determination is one.
Section 12. Settlements with reservation
(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 expressed 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:
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.
Explanation.- A settlor reserving an interest in the settled (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 person 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.
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 self 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
(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.
Explanation .- A policy of insurance on the life of a deceased person effected by virtue or in consequence of a settlement made by the deceased shall be treated as having been effected by the deceased.
(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, arising under the settlement, shall be treated as having been paid by the deceased :
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 was not made as part of any reciprocal arrangements between the deceased and any other person.
(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.