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1990 DIGILAW 917 (MAD)

Controller of Estate Duty v. Rm. Mutthappan

1990-10-26

RATNAM, SOMASUNDARAM

body1990
Judgment :- RATNAM J. These tax case references arise out of the estate duty assessment of Shri Ramanathan Chettiar, who died on February 23, 1964 at Melasivapuri. In the estate duty account filed by the son of the deceased, the accountable person, it was claimed that the deceased was domiciled in Malaya and, therefore, the foreign movable properties valued at Rs. 3, 65, 700, could not be included in the dutiable estate. The Assistant Controller of Estate Duty rejected the claim so made by the accountable person, holding that the deceased had not abandoned the domicil of origin with a view to acquire a domicil of choice in Malaya. In that view, the value of the foreign movables, was also included in the value of the estate that passed on the death of Shri Ramanathan Chettiar. On appeal by the accountable person before the Appellate Controller of Estate Duty, it was found that the deceased had manifested an intention to continue his domicil of origin and in that view, the order of the Assistant Controller of Estate Duty was affirmed and the appeal was dismissed. On further appeal by the accountable person before the Tribunal, it took a contrary view and upholding the stand taken by the accountable person, excluded the value of foreign movable properties from assessment. On a reference at the instance of the Controller of Estate Duty, Madras, the matter was brought up before this court earlier and this court directed the Tribunal to consider the question, whether the deceased had given up the domicile of origin and had acquired a new Malayan domicil, afresh, and dispose of the appeal. Pursuant to this direction, the Tribunal, after hearing the appeal afresh, concluded that on the date of death, deceased Ramanathan Chettiar was domiciled in Malaya, and, therefore, the value of the foreign movable properties should be excluded from assessment to estate duty. Pursuant to this direction, the Tribunal, after hearing the appeal afresh, concluded that on the date of death, deceased Ramanathan Chettiar was domiciled in Malaya, and, therefore, the value of the foreign movable properties should be excluded from assessment to estate duty. That is how, again, in T. C. No. 114 of 1980, the following question of law has been referred for the opinion of this court at the instance of the Controller of Estate Duty, Madras, under section 64(1) of the Estate Duty Act, 1953 (hereinafter referred to as "the Act") "Whether, on the facts and the circumstances of the case, on the date of his death, the deceased was domiciled in Malaya ?" * In the course of securing a reference under section 64(1) of the Act, the Controller of Estate Duty also sought a reference on two other questions, which were, however, negatived by the Tribunal, and, under section 64(3) of the Act, the Controller of Estate Duty, had sought and obtained reference in T. C. No. 462 of 1986 on the following two questions of law. "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the deceased had given up the domicil of origin and acquired a new Malayan domicile ? (2) Whether, on the circumstances relied on, the accountable person could be said to have discharged the onus placed on him to show that the domicil of origin has been superseded by a domicil of choice ?" * Thus, the question to be decided in these tax case references is what was the domicil of Shri Ramanathan Chettiar on his death in India on February 23, 1964 ? We may observe that there is no dispute that the father of the deceased, when the deceased was born, was domiciled in India and, therefore, the domicil of origin of deceased Ramanathan Chettiar was in India. Whether the deceased Ramanathan Chettiar abandoned the domicil of his origin in India and secured a domicil of choice in Malaya, would depend upon the state of mind or animus manendi of the deceased, apart from his physical presence or personal appearance in Malaya. We may, in this connection, make a reference to the decision of the Supreme Court in Kedar Pandey v. Narain Bikram Sah, 1966 AIR(SC) 160, 1965 (3) SCR 793 , 45 ILR(Pat) 878. We may, in this connection, make a reference to the decision of the Supreme Court in Kedar Pandey v. Narain Bikram Sah, 1966 AIR(SC) 160, 1965 (3) SCR 793 , 45 ILR(Pat) 878. In that case, the controversy related to the question whether the respondent before the Supreme Court was a citizen of India so as to fulfil the qualification under article 173 of the Constitution of India to contest the Assembly elections in Bihar, and in deciding that question, the principles governing the change of domicil came to be considered by the Supreme Court. The following observations at pages 163 and 164 would be relevant. "The law attributes to every person at birth a domicil which is called a domicil of origin. This domicil may be changed, and a new domicil, which is called a domicil of choice, acquired ; but the two kinds of domicil differ in one respect. The domicil of origin is received by operation of law at birth ; the domicil of choice is acquired later by the actual removal of an individual to another country accompanied by his animus manendi. The domicil of origin is determined by the domicil, at the time of the child's birth, of that person upon whom he is legally dependent . . . As regards change of domicil, any person not under disability may at any time change his existing domicil and acquire for himself a domicil of choice by the fact of residing in a country other than that of his domicil of origin with the intention of continuing to reside there indefinitely. For this purpose, residence is mere physical fact, and means no more than personal presence in a locality, regarded apart from any of the circumstances attending it. If this physical fact is accompanied by the required state of mind, neither its character nor its duration is in any way material. The state of mind, or animus manendi, which is required demands that the person whose domicil is the object of the inquiry should have formed a fixed and settled purpose of making his principal or sole permanent home in the country of residence, or in effect, he should have formed a deliberate intention to settle there. The state of mind, or animus manendi, which is required demands that the person whose domicil is the object of the inquiry should have formed a fixed and settled purpose of making his principal or sole permanent home in the country of residence, or in effect, he should have formed a deliberate intention to settle there. It is also well-established that the onus of proving that a domicil has been chosen in substitution for the domicil of origin lies upon those who assert that the domicil of origin has been lost. The domicil of origin continues unless a fixed and settled intention of abandoning the first domicil and acquiring another as the sole domicil is clearly shown ... We are of the view that the only intention required for a proof of a change of domicil is an intention of permanent residence. In other words, what is required to be established is that the person who is alleged to have changed his domicil of origin has voluntarily fixed the habitation of himself and his family, in the new country not for a mere special or temporary purpose, but with present intention of making it his permanent home." * Against the backdrop of these observations of the Supreme Court, we have to consider the facts in the present case for deciding whether the deceased had adopted Malaya as his permanent residence with the intention of acquiring a domicil of his choice and thereby of abandoning his domicil of origin in India. Sri Ramanathan Chettiar belonged to that class of people, who had adventure in their blood and were sea faring people crossing the seas in the way of their business and no wonder he departed from the shores of India to Malaya, for business purposes, in which perhaps he applied himself with an amount of attention, constancy and diligence that was never relaxed. From the facts, it is seen that deceased Ramanathan Chettiar left India for Malaya in 1946, returned to India in 1950, and after staying for a few months again left for Malaya and after staying for about four years, he returned to India and stayed for nearly two years. He again left for Malaya to return to India nearly seven years later, and on his last visit of India, on February 23, 1964, he died. He again left for Malaya to return to India nearly seven years later, and on his last visit of India, on February 23, 1964, he died. The Tribunal, in para 16 of its order, had also found that the deceased went to Malaya for business purposes and settled there for the same purpose and had visited India on several occasions. From the fact of his stay in Malaya in his residential property, the Tribunal proceeded to infer an intention on the part of the deceased to settle down in Malaya on a permanent basis. Merely on the basis of the period of stay and the presence of the deceased in Malaya in his residential house, it is not possible to infer that there was an abandonment of domicil of origin by the deceased. At best, the residence and thereby the personal appearance in Malaya, would be in the nature of a physical fact, as pointed out by the Supreme Court. However, the requirement is that the physical fact should be accompanied by a state of mind to have a fixed and settled abode in Malaya with the intention of making Malaya the principal or sole permanent home. The period during which the deceased was residing in Malaya, can be attributed to his carrying on his business in Malaya. Even according to the Tribunal, the deceased had left the shores of India and stayed in Malaya for the purpose of his business, and, under those circumstances, merely on the basis of the period of residence of the deceased in Malaya, it cannot be stated that the deceased had abandoned his domicil of origin. On the contrary, the retention of ancestral houses and other properties in India and his visits to the family in India, would constitute facts in the opposite direction indicating a heavy pull towards home and establishing that the deceased had not broken away from his home, or had severed a single tie with his country of origin. Even when there is an apparent severance of ties with the country of origin, by residence in another country for a long time, it would be unsafe to gather an intention to abandon the domicil of origin, if it could be attributed to some other cause, as, in this case, business reasons. Even when there is an apparent severance of ties with the country of origin, by residence in another country for a long time, it would be unsafe to gather an intention to abandon the domicil of origin, if it could be attributed to some other cause, as, in this case, business reasons. Further, it would be a material circumstance in determining the domicil of a person to consider where the wife and children have their permanent place of residence. In this case, it is not disputed that the wife and children of the deceased had their permanent place of residence only in India and this is also referred to by the Tribunal in the course of its order. That would also establish that the deceased had surrendered to the power of human affection, particularly of his wife and children and that brought him to India, though at intervals. It is also significant that the deceased had died while on a visit to India to finalise his son's marriage and that also clearly establishes that severance of ties with the country of origin was farthest from his mind. Besides, the Tribunal had referred to the assessments of the deceased for the assessment years 1947-48 to 1963-64, in the status of "non-resident" and in the status of "not ordinarily resident" for 1964-65 and 1965-66. The reliance on the income-tax assessments, in our view, was misplaced, for, those assessments had been made on the basis of the provisions of the Indian Income-tax Act and that would not in any manner indicate the state of mind of the deceased regarding domicil. The Tribunal had also made a reference to the obtaining of Malayan passport by the deceased and his registration as a citizen of Malaya as clear indications of abandonment of domicil of origin. It is seen that till 1960, the deceased had only an Indian passport. It is thereafter that the deceased appears to have obtained on December 14, 1962, Malayan passport valid up to 1967. But, there are also the other facts, like the acceptance of the claim of the deceased in his income-tax assessments that two properties in India were his dwelling houses, the purchase of site in 1961 in India out of his funds in the name of his wife, the provision for the payment of his insurance monies in India. But, there are also the other facts, like the acceptance of the claim of the deceased in his income-tax assessments that two properties in India were his dwelling houses, the purchase of site in 1961 in India out of his funds in the name of his wife, the provision for the payment of his insurance monies in India. Unfortunately, these facts have not been taken into account by the Tribunal in considering the question of acquisition of domicil of choice. The obtaining of a passport or the acquisition of Malayan citizenship would not, in our view, loom large in the consideration of the question of abandonment of the domicil of origin. These could at best be described as matters of business expediency and utility. Essentially, a passport is a travel document and the obtaining of such a travel document would not in any manner indicate abandonment of the domicile of origin. For the purpose of business, the deceased Ramanathan Chettiar had gone to Malaya on an Indian passport, which was valid till January 19, 1960 and it is quite possible that being fully posted with the local business conditions, he had thought it worthwhile and prudent to secure citizenship of Malaya in 1958 and on that footing, had obtained Malayan passport in 1962. We have not had the benefit of ascertaining the conditions under which Malayan citizenship had been granted to the deceased. The application that should have been made by the deceased had not been placed before us, and there is, therefore, no knowing whether he had made any clear and unequivocal declaration under his hand to acquire Malayan citizenship by totally severing all his connections with India, abandoning his domicil of origin. For all that, it might have been quite in order to secure citizenship of Malaya, if a person had put in minimum period of residence, that is, physical residence, but that would not enable to establish a change of domicil. Even assuming that he had made some such declaration, as pointed out by Lord Atkin in Wahl v. Attorney-General 1932 ALLER 922, it is important to remember that naturalisation is one thing, and change of domicil is another, and that it is not the law either that a change of domicil is a condition of naturalisation, or that naturalisation involves necessarily a change of domicil. Yet another circumstance strongly relied upon by the Tribunal was a statement in the will of the deceased declaring that the domicil of the deceased was in the Federation of Malaya and that he desired his will to take effect according to the law of that country. We are of the view that this circumstance may not be conclusive, for, the concept of domicil is an idea of law and not a matter of choice of a citizen and the question of domicil must be decided anima et facto on a consideration of the animus manendi. We may, in this connection, refer to the following passage in Cheshire on Private International Law (Seventh Edition) at page 156. "The requirement that declarations should contain 'a real expression of intention' deserves emphasis, for it only too frequently happens that they cannot be taken at their face value. They may be interested statements designed to flatter or to deceive the hearer ; they may represent nothing more than vain expectations unlikely to be fulfilled ; and the very facility with which they can be made requires their sincerity to be manifested by some active step taken in furtherance of the expressed intention." * It would also be appropriate to refer to Attorney-General v. Yule and Mercantile Bank of India 1931 ALLER 400; 145 L. T. 9, where the question arose whether a declaration in a will regarding domicile would be conclusive. Lord Hanworth, Master of the Rolls, observed at page 404 as follows: "For my part, the wills, or drafts of them, have not much weight the source of the description in the draft or the will remains obscure and uncertain. I do not find any sure ground on which to base an inference." Romer L. J. at page 408, in considering the question of the effect of declaration made in a will regarding domicil, pointed out that no importance could be attached to such declaration, in the following words. "It only remains to refer to the declaration contained in his will. For myself, I am not prepared to attach any importance to a declaration by man as to his domicil, unless there is some evidence to show that the man knew what 'domicil' means. "It only remains to refer to the declaration contained in his will. For myself, I am not prepared to attach any importance to a declaration by man as to his domicil, unless there is some evidence to show that the man knew what 'domicil' means. A declaration by a man made orally or in writing that he intends to remain in a certain country will, if not inconsistent with the facts, be of assistance in determining the question whether he has become domiciled there. Domicile is, however, a legal conception on which the views of a layman are not of much assistance. In the present case, the subject appears to have been presented to the testator, as and upon which he had for the purpose of his testamentary dispositions an unfettered choice. The subject of domicil being so presented, he elected in favour of an Indian one. It is true that some of the testamentary dispositions he desired to make could not be given effect to, if his domicil were Indian, and that, by reason of his election those dispositions had to be modified. It is, however, obvious that the election of an Indian domicil would greatly benefit the principal objects of his bounty, though whether this, was or was not known to Sir David, we do not know. But, however this may be, the fact that when his solicitor offered him a choice of domicil, he chose an Indian one, can have no bearing upon the question of what his domicil in fact was in circumstances that, as I have already indicated, were so strong as to deprive him of exercising any choice in the matter at all." * We find from the preamble to the will that the deceased had declared his domicile with a desire that the bequests should take effect according to the law of Malaya. We have not had the benefit of the full text of the will as well as the bequests therein. We have not had the benefit of the full text of the will as well as the bequests therein. It may be as stated by Romer L. J., that with a view to give effect to some of the testamentary dispositions, which could not be given effect to, if he was a person of Indian domicil, the testator elected to describe himself as a person of Malayan domicil, We are also unable to find any material from which it could be gathered that the testator knew or was aware of the importance of the declaration relating to the domicil and that he did not merely as a layman, before whom an option to elect in favour of one of the two domicil was presented with a view to implement the bequests in the will. We may also refer to Liddell Grainger's Will Trusts 1936 (3) ALLER 173(Ch D), where the domicil of origin of the testator was England, where he was born ; but he moved over to Scotland, where his father purchased certain properties and lived there till his death. Under the will of the father, the properties in England and Scotland passed to the testator, but he lived in Scotland from 1897 onwards till his death, except for brief visits to England. In his three prior wills and his last will, the testator had declared that he had not relinquished his English domicile and, on the question as to whether the testator, at the time of his death, was domiciled in England or in Scotland, the court ruled that despite declarations in the will, the testator intended that Scotland should be his permanent home and that was his place of domicile. This case illustrates the principle that a declaration in the will is not always decisive ; but has to be considered in the light of the other facts and the circumstances. We are, therefore, of the view that in the light of the other circumstances earlier referred to appearing in the case, the recital in the will cannot be taken as conclusively establishing an intention on the part of the testator to acquire a domicile of choice, viz., Malaya, abandoning his domicile of origin in India. We are, therefore, of the view that in the light of the other circumstances earlier referred to appearing in the case, the recital in the will cannot be taken as conclusively establishing an intention on the part of the testator to acquire a domicile of choice, viz., Malaya, abandoning his domicile of origin in India. We also find on a perusal of the record of proceedings, that the tribunal has adverted only to the visits of the deceased, his obtaining a Malayan passport and securing Malayan citizenship and the recitals in the will, as supporting its conclusion, but, while doing so, it had omitted to consider the other circumstances, like the retention of ancestral properties in India, claim of the deceased with reference to the dwelling houses in India, the purchase of property by the deceased in the name of his wife in 1961 in India, the arrangement for payment of insurance moneys in India, the presence of his family members in India and the proposal for the marriage of his son in IndiaIn other words, as pointed out by the Supreme Court in Omar Salay Mohamed Sait v. CIT1959 (37) ITR 151, 1959 AIR(SC) 1238, at page 170, it was necessary for the Tribunal to have considered every fact, for and against, and then to give finding in a manner which would clearly indicate the nature of the question, the evidence pro and contra and the findings reached. We find that the Tribunal had over-emphasised a few circumstances as, being almost decisive of the case, without adverting to the other circumstances, and we cannot, therefore, accept the conclusion arrived at by the Tribunal in view of what had been laid down by the Supreme Court in Omar's case 1959 (37) ITR 151, 1959 AIR(SC) 1238. We may also point out that learned counsel for the accountable person relied upon circumstances referred to in the order of the Tribunal to contend that an intention to abandon the domicile of origin and acquire a domicil of choice had been made out. But we are unable to accept this for the reasons set out earlier. We may also point out that learned counsel for the accountable person relied upon circumstances referred to in the order of the Tribunal to contend that an intention to abandon the domicile of origin and acquire a domicil of choice had been made out. But we are unable to accept this for the reasons set out earlier. Likewise, the reliance upon the decision of the Supreme Court in Abdus Samad v. State of West Bengal, 1972 CAR 395, 1973 (79) CRLJ 1, 1973 (1) SCC 451 , 1973 UJ 380 , 1973 SCC(Cri) 358, 1973 SCC(Cr) 358, 1973 AIR(SC) 505by counsel for the accountable person does not in any manner support the case of the accountable person that there was an abandonment of the domicile of origin and the acquisition of a domicile of choice by the deceased or even the conclusions arrived at in that regard by the Tribunal. We, therefore, answer the question referred in T. C. No. 114 of 1980 in the negative and in favour of the Revenue. Likewise, the questions referred in T. C. No. 462 of 1986 are answered in the negative and in favour of the Revenue. The Revenue will be entitled to its costs in these references. Counsel's fee Rs. 500 (one set).