Income Tax Appellate Tribunal - Ahmedabad
Smt. K.C. Gandhi vs Controller Of Estate Duty on 8 May, 1991
Equivalent citations: [1991]38ITD378(AHD)
ORDER
M.A.A. Khan, Judicial Member
1. The question of the domicile of the deceased at the time of his death arises in this appeal in the context of inclusion or exclusion of the movable property of the deceased amounting to £ 9014.14 equivalent to Rs. 1,46,928. This question arises under the following circumstances.
2. Late Sri C.S. Gandhi was born on 3-11-1901 at Morvi, then a princely State outside British India. In search of his bread and butter he migrated in 1921 to Kenya, then a British Colony of United Kingdom (U.K.), where he got himself employed in a concern of timber engineers, manufacturers and suppliers known as Timsales Ltd. In the course of time he applied on 25-9-1951 for grant of citizenship under Section 6(1) of the British Nationality Act, 1940 and was registered on 28-9-1951 as a citizen of the United Kingdom and colonies under the provisions of the said Act.
3. Late Sri Gandhi retired with effect from 12-4-1972 from the service with Timsales Ltd. After his retirement he applied for the issue of a passport declaring his nationality as a British subject and U.K. as his country of residence. It may be mentioned here that Sri Gandhi was blessed with two sons viz. Navnitlal and Krishanlal, three daughters Vimla, Sushila and Bhanumati, besides his wife Smt. Kanta Gauri (A.P.). Navnitlal was staying and carrying on business in the name of M/s Printwell at Morvi, Rajkot (India) and Krishanlal was residing in London (U.K.). Vimla was married in Calcutta (India), Sushila in Morvi (India) and Bhanumati in Morvi. His wife Smt. Kanta Gauri was the daughter of one Shri Jechand Maniar of Nairobi (Kenya) and his daughter Bhanumati was married with one Kantilal Shah of Nairobi. A passport was issued to him on 3-8-1972.
4. After obtaining the passport on 3-8-1972 the late Sri Gandhi reached India on 4-8-1972 and stayed with his son up to 30-5-1974. He left for Nairobi and reached there on 31-5-1974 and stayed there up to 17-9-1974. During this period be executed his last will on 28-8-1974. Then he left for London, reached there on 18-9-1974 and stayed with his son up to 25-12-1976. On 26-12-1976 he reached India, stayed with his second son at Morvi and died on 28-1-1979.
5. It was in the above circumstances that the widow of the deceased filed the account on 6-3-1982 wherein a plot of land admeasuring 800 sq. yds. in a village Nana Malwa near Rajkot worth Rs. 6000, shares of limited companies valued at Rs. 344, fixed deposits with Banks amounting to Rs. 2,01,439 with accrued interest and readjustment of taxes, balance in some bank account amounting to Rs. 12,846, loans and advances to M/s Printwell with interest accrued at Rs. 1,37,628 were included in the principal value of the estate of the deceased. The Asstt. Controller of Estate Duty (ACED) noted that the movable property of the deceased in U.K. of £ 9014.14 = Rs. 1,46,928 had not been included in the principal value. The A.P. supported the exclusion of the said movable property of the deceased with the contention that the deceased, was not domiciled in India at the time of his death. The ACED on the basis of Madras High Court decision in the case of CED v. Dr. Ida Bella Scuddar [1980] 123 ITR 104 and Bombay High Court decision in the case of CED v. V. Melnikoff [1982] 134 ITR 583 did not accept the contention and held that the deceased was a domicile in India at the time of his death and his British Citizenship, issue of a British passport to him and the statements in the probate issued by the High Court of Justice, fail to destroy the domicile of the origin of the deceased. He accordingly included the value of the movable property of the deceased in U.K. in the principal value of the deceased. In appeal the Appellate Controller of Estate Duty, Rajkot (CED) confirmed his order. Hence this appeal by the A.P.
6. Mr. K.C. Patel, Advocate, appearing for the A.P. has urged that in order to determine the domicile of the deceased at the time of his death the entire life span of the deceased, his actions, behaviour and movements were required to be taken into account and the only fact that the deceased was having a plot in a village near Morvi and had made certain investments in India should not have outweighed the probative value of other factors which clearly spoke that the deceased was not a domicile of India at the time of his death. The learned D.R. has no doubt supported the order under appeal almost on the same grounds which have found favour with the Estate Duty authorities but we are satisfied that the submissions made on behalf of the A.P. cannot be lightly dismissed.
7. Section 21(1) of the Estate Duty Act, 1953 (the Act) lays down, inter alia, that "there shall not be included in the property passing on the death of the deceased movable property situated outside India at the time of the death unless in the case of any property, whether settled or not, the deceased was domiciled in India at the time of his death". Clause (d) of Sub-section (1) of Section 3 of the Act says that "the domicile of a person shall be determined as if the provisions of Indian Succession Act, 1925, on the subject, applied to him". Section 6 of that Act says that a person can have only one domicile for the purpose of succession to his movable property. "Domicile" is classified under three heads (1) by birth (2) by choice and (3) by operation of law. In the peculiar facts of the present case, the first two categories are retevant for our purpose. But the term "domicile" is not to be treated as synonym in meaning to the terms "citizenship" and/or "residence". The distinction between the three statuses of a person viz. citizenship, residence and domicile is necessary to bear in mind in order to appreciate the true status of the deceased, which is under consideration in this case. "Citizenship" has reference to political status of aperson, "Residence" to his physical connection with a particular territory and "domicile" to his civil rights which would be governed by the system of the law of the country that person is "domicile" of. Thus the relationship of domicile is between a person and a country.
8. As stated above a person can have only one domicile for the purpose of succession to his movable property. The domicile of origin, which has a relation with the domicile of the father of the person concerned prevails until a new domicile is acquired. And a man acquires a new domicile by taking up his fixed habitation in a country which is not that of his domicile of origin. That means that the domicile of origin may be lost by acquiring a new domicile as per provisions of Section 7 of the Indian Succession Act. Once the domicile of origin is lost in India that can be resumed or regained as per provisions of Section 11 of that Act which says that the person concerned shall have to make and deposit in some office in India, appointed in that behalf by the State Government, a declaration in writing under his hand of his desire to acquire such domicile. Before such declaration is made he should have resided in India for one year immediately preceding the declaration. Section 13 of that Act clarifies that a new domicile continues until the former domicile has been resumed or another has been acquired. Thus a domicile can be acquired by choice also.
9. Now coming to the instant case it is established fact that the late Mr. Gandhi had migrated to Kenya in the year 1921 and remained in service there with M/s Timsales Ltd. until he retired on 12-8-1972. Kenya was then a British colony and during the meanwhile Sri Gandhi had acquired British citizenship on 28-9-1951. Kenya was not the country of his domicile of origin and by the conduct of Sri Gandhi in marrying, there at Kenya, getting his daughter married with a person residing there and establishing one of his sons in London, it can be inferred that he had taken up his fixed habitation in U.K. or a British Colony. His further conduct of getting a passport on 3-8-1972, reaching India on 4-8-1972 but again returning to Nairobi on 31-5-1974 exhibits that he did not intend to settle down in India. Had he been having such an intention he could have exhibited that by some overt act viz. constructing a house, executing a will here and making a declaration to that effect. It may be noted that he chose to execute his last will at Nairobi on 20-8-1974 and then left for London on 18-9-1974 where he stayed up to 25-12-1976. All these circumstances considered in proper perspective clearly suggest that Sri Gandhi had acquired a new domicile (of U.K.) by taking up his fixed habitation in Kenya which was not the country of his domicile of origin, i.e., India. Having done that he could have resumed or regained his domicile of origin as per provisions of Section 11 of the Indian Succession Act, which, of course, he did not do, despite his residing in India with his second son for more than one year before his death. We, therefore, hold that for the purpose of the movable property in question, which was admittedly out of India, the late Sri Gandhi was not a domicile of India at the time of his death.
10. The ACED seems to have been influenced by the purchase of a plot at Morvi by the deceased. That plot was purchased in 1964 and the conduct of the deceased in not making any effort to get a house constructed thereon up to the year 1979 suggests that he did not intend to reside in India. Similarly the investments made by the deceased in India are also no convincing proof of his intention to regain his domicile of origin. The deceased was having similar property in U.K. also.
11. To sum up we are of the opinion that the property in question is not includible in the principal value of the estate of the deceased passing on his death. The addition be, therefore, deleted.
12. The appeal is allowed.