Judgment Case ID: 5734

Judgment:
ION: Civil Appeal Nos. 946 of 1975 & 1251 of 1975. From the Judgment and order dated 11.10.1974 of the Calcutta High Court in Estate Duty Reference No. 117 of 1971. Dr. Shankar Ghosh	 D.P. Mukharji and G.S. Chatterjee for the Appellant in C.A. No. 946/75 and for Respondent in C.A. No. 1251 of 1975. C.M. Lodha	 Ms. A. Subhashini and K.C. Dua for the Respondent in C.A. No.946/75 and for the Appellant in C.A. No. 1251 of 1975. The Judgment of the Court was delivered by VENKATACHALIAH	 J. These appeals	 by certificate	 under Section 65 of the Estate Duty Act of 1953 ( 'Act ' for Short) one by the accountable person and the other by the Deputy Controller of the Estate Duty arise out of and are directed against the Judgment	 dated 11.10.1974 of the High Court of Calcutta	 answering	 in a reference under Section 64(1) of the 'Act '	 the question of law referred for its opinion. The matter pertained to the determination of the principal value of the Estate passing on the death	 which occurred on 24.3.1960	 of a certain Satya Charan Srimani. Dipti Narayan Srimani	 appellant in CA 946/1975 is the son of the deceased and is the accountable person. The said Satya Charan Srimani during his life time had executed three trust deeds	 dated	 8.12.1947	 21.9.1953 and 4.10.1959 respectively. In the proceedings	 the nature and effect of the dispositions made under the deeds of the trust	 dated	 21.9.1953 and 4.10.1959 fell for consideration. Under the deed	 dated	 21.9.1953	 Satya Charan Srimani as settlor	 transferred upon trust to himself as trustee 4 items of immovable property	 viz. 130 and 133	 upper circular Road; and 32/5 and 32/5 Beadon Street	 Calcutta. The objects and purposes of the trust	 broadly stated	 were: (i) the conduct of the daily worship and sevas of the Deity Sree Sridhar Jiu; 274 (ii) the carrying out of certain charitable acts	 deeds and things mentioned in schedule B of the deed; (iii) the making of provision for the maintenance of himself and the persons mentioned in the said deed. The trustee was required	 after defraying taxes and other out goings	 to accumulate 1/4th of the net income to be set apart for purposes of effecting certain additions and alterations to the properties; to make over another 1/4th of the net income to the shebait for the conduct of the daily and periodical pujas	 worship and rituals of the said deity; another 1/4th for the charities mentioned in the deed and the remaining 1/4th for the personal benefit of the settlor during his life time and to his heirs thereafter. After the developmental works were completed	 the proportions of the shares allotted to various objects were suitably modified in that 7/16th share was to be made over to the shebait; 4/16th share to be spent for charitable purposes and 5/16th for the benefit of the settlor and his heirs. Under the deed dated	 4.10.1959	 the settlor transferred upon trust to himself and his son Dipti Narayan Srimani as Trustees	 six other properties	 one of them situate in Varanasi	 for the conduct of daily worship and periodical festivals	 rituals and ceremonies of the deity	 Shri Ishwar Gobinda Jiu; for certain charitable purposes and also for the benefit of himself and his heirs. The settlor provided for his residence	 free of rent	 in one room on the ground floor in the Varanasi property. A 1/4th of the net income of the trust properties	 after defraying expenses and taxes	 was to be paid to the shebait for the conduct of the worship	 rituals and services of the deity Shri Ishwar Gobinda Jiu; another 1/4th to be spent on the charitable purposes mentioned in the deed and the balance of 1/2 for the development	 additions and alterations of two of the trust properties viz. No. 41 & 42 Macleod Street Calcutta. After completion of the developments and alterations	 the said 1/2 share was stipulated to go for the benefit of the settlor during his life time and thereafter to his heirs. Under both the dispensations	 the settlor constituted himself the shebait. In the proceedings of assessment to estate duty	 the question arose whether the trust deeds attracted and fell within Section 12(1) of the 'Act '. The accountable person contended that the four trust properties under deed dated 21.9.1953 could not be said to be "Settled Property" within the definition in Section 2(19) and that at all events what must be held to pass would only be a 1/4th share	 275 corresponding to the benefit reserved for the settlor and his heirs. Similarly	 in respect of the six trust properties covered by the deed	 dated 4.10.1959	 it was urged that the properties were not "Settled Properties" and that at all events only 1/2 of the property so passed. The Deputy Controller of Estate Duty; the Appellate Comptroller of Estate Duty in the first appeal and the Income Tax Appellate Tribunal	 Calcutta	 in the second appeal	 held that the entire subject matter of the two deeds must be held	 or deemed	 to pass on death. The value of the properties constituting the subject matter of deed dated	 21.9.1953 estimated at Rs.4	69	287 and those constituting the subject matter of the deed	 dated	 5.10.1953 at Rs.1	27	400 were accordingly	 included in the principal value of the estate passing on death. On 20.2.1971	 the Tribunal at the instance of the accountable person stated a case and referred under Section 64 of the 'Act ' the following question of law for the opinion of the High Court: "Whether on the facts and in the circumstances of the case and on a proper interpretation of the trust deeds dated	 21.9.1953 and 4.10.1959	 the properties comprised therein are dutiable under Section 12(1) of the Act. A Division Bench of the High Court by its judgment	 dated 11.10.1974 held that so far as the four properties comprised in the deed	 dated 21.9.1953 were concerned	 they were "Settled Property" within the meaning of Section 2(19) and that Section 12(1) was attracted. The High Court observed: ". .So far as the deed dated 21.9.1953 is concerned	 by the said deed the property has been made debutter and there is	 therefore	 a dedication in favour of the deity; and as the settlement by the said deed creates or results in a dedication or endowment	 the properties settled by the said deed should	 therefore	 be considered to be settled properties	 in view of the specific provision contained in sec. 2(19) relating to dedication or endowment . " ". The provisions contained in the deed dated 21.9.1953 which we have earlier considered	 clearly indicate that the settlor has reserved to himself an interest in the properties within the meaning of section 12(1) of the Act. He has 276 expressly reserved for himself for life one fourth share of the income of the properties before development and seven sixteenth share of the income of the properties after development. Section 12(1) is therefore clearly attracted to the properties mentioned in the said deed dated 21.9.1953 . " However	 the High Court took a different view in relation to the properties covered by the deed	 dated 4.10.1959 and held that they were not hit by Section 12(1). The High Court said: ". As in our opinion the properties covered by the deed dated 4.10.59 are not sattled properties	 section 12(1) cannot apply to the said properties . " Concluding the High Court held: ". . We must therefore	 hold that section 12(1) of the Act applies to the trust deed dated 21.9.1953 and the said section has no application to the trust deed dated 4.10.1959. Accordingly we answer the question by saying that the properties comprised in the trust deed dated 21.9.1953 are dutiable under section 12(1) of the Estate Duty Act and the properties comprised in the trust deed dated 4.10.1959 are not dutiable under section 12(1) of the Estate Duty Act . " The Division Bench	 however	 left open the question	 whether the properties	 constituting the subject matter of the trust deed	 dated 4.10.1959	 would attract any other provision of the Act	 to be decided by the appropriate authority. From this opinion expressed by the High Court	 both the accountable person and Deputy Controller of the Estate Duty have come up in appeal the former aggrieved by the inclusion of the whole of the properties	 comprised in the trust dated 21.9.1953 in the principal value of the estate; and the latter by the exclusion of the properties constituting the subject matter of the trust dated 4.10.1959 from the principal value of the estate. We have heard Dr. section Ghosh	 learned Senior Advocate for the accountable person and Shri C.M. Lodha	 learned Sr. Advocate for the Revenue. 277 Having regard to the career of this litigation and the varying shades of the legal thought attracted by it both in the statutory appeals and before the High Court	 one is tempted to recall the reflections of Diplock L.J. in Re: Kilpatrick 's at 1370. "As in nearly all appeals about estate duty	 I reach my decision without confidence. Were I a betting man I should lay the odds on its being right at 6 to 4 (i.e.	 3 to 2) on or against. If ever a branch of law called for reform in 1966	 it is the law relating to estate duty. It ought to be certain: it ought to be sensible it is neither . ." In Re Weir 's Settlement 	 Cross J had said: "The facts are simple enough	 but it will not surprise any one acquainted with this branch of the law to learn that the argument lasted over four days during which counsel at all events wasted no words and that some thirty authorities	 many of them in the House of Lords	 were referred to. The law of estate duty has indeed now attained a degree of refinement which would have gladdened the heart of Lort Sd. Leonards. " The legislative expediencies in the development of the law of Death Duties in England reflect an on going	 and no less interesting	 interaction between the resourceful ingenuity of the conveyancing lawyer on the one hand and the legislative vigilance to plug the susceptibilities of the law that sustain tax planning	 on the other. The handy tool of the conveyancing lawyer was the notion in the law of Real property that ownership was detached from 'land ' and was attached to something called the 'estate ' in land. The submissions of the learned counsel in the appeals are patterned substantially on the ground covered before the High Court. In support of the accountable person 's appeal Dr. Ghosh submitted: a) First	 that	 on a proper construction of the two deeds	 what must be held to constitute their subject matter are only the shares in the properties corresponding to the interests intended for the benefit of the deities and the charities; and that the interest in the property correspond 278 ing to the benefit retained by the settlor was not the subject matter of the disposition at all; b) Secondly	 that	 even if both the documents might admit of being called "settlements" in a wider sense the properties dealt with thereunder were not "Settled Property" within the meaning of Section 2(19) as there was no in tervening limited interest before a final vestiture of the ownership; and c) Thirdly	 that	 at all events	 what must be held to attract and fall within the mischief of Section 12(1) and be deemed to pass on death would only be the value of such share as corresponds or referable	 to the quantum of interest so reserved by the settlor namely 5/16th share in the properties covered by the first document and 1/2 share in the properties comprised in the second document and not the entire value of all the properties. Shri C.M. Lodha learned Senior Counsel for the Revenue submitted that this case was frank case of what	 by definition	 attracted the wider net of Section 12(1) and that resort to the implications of "Settled Property" under Section 2(19) was unnecessary once it is clear that there is a "settlement" within the meaning of Section 12(1) coupled with the reservation of an interest however small. Learned Counsel submitted that the distinction made by the High Court between the properties covered by deed	 dated	 21.9.1953 on the one hand and those covered under deed	 dated	 4.10.1959 on the other	 is	 in the ultimate analysis	 a distinction without a difference. 9.The first contention of Dr. Ghosh pertaining to what	 according to him	 should be held to be the subject matter of the trust deeds	 is essentially a matter of construction of the deeds. There is	 no doubt	 a discernible difference between a case of settlement of property with reservation of a benefit to the settlor on the one hand and the case where what is settled is only a share or interest or part of the property	 excluding the part or the share corresponding to the benefit that the settlor has chosen to retain. There is	 indeed	 no transfer at all in the latter case. Dr. Ghosh says that there is really no transfer of the share corresponding to the benefit reserved in both the cases. This is the construction learned counsel wants the court to place on the two deeds. 279 In St. Aubyn vs Attorney General (See 1951 (2) All England Reports 496)	 Lord Radcliffe brought out this distinction between what was transferred and what was retained: . .it is the possession and enjoyment of the actual property given that has to be taken account of	 and that if that property is	 as it may be	 a limited equitable interest or an equitable interest distinct from another such interest which is not given or an interest in property subject to an interest that is retained	 it is of no consequence for this purpose that the retained interest remains in the beneficial enjoyment of the person who provides the gift . " The distinction between the two types of dispositions is brought out in the context of Section 10	 in Controller of Estate Duty	 A.P. Hyderabad vs Smt. Godavari Bai	 ; at 635: ". In other words if the deceased donor limits the interest he is parting with and possesses or enjoys some benefit in the property not on account of the interest parted with but because of the interest still retained by him	 the interest parted with will not be deemed to be a part of the estate of the deceased donor passing on his death for the purpose of section 10 of the Act. It is these aspects which mark the distinction between the two leading cases	 namely Chick 's case 1959 3 ITR (ED) 89 and Munro 's case ; (supra). As we shall indicate presently Chick 's case falls within the first category while Munro 's case falls within the other category . ." Again	 in the Controller of Estate Duty	 Kerala vs M/s. R.V. Vishwanathan & Ors.	 ; at 97 & 99 it was observed: "14. The question as to whether gifted property should be held to be a part of the estate of the deceased donor passing on his death for the purpose of Section 10 of the Act is not always free from difficulty. It would depend upon the fact as to what precisely was the subject matter of the gift and whether the gift was of an absolute nature or whether it was subject to certain rights. There is a fine but real distinction between the two types of cases . ." ". .To put it in other words	 if the deceased owner 280 delimits the interest he is parting with and possesses and enjoys some benefit in the property not on account of the interest parted with but because of the interest still retained by him	 the interest parted with shall not be deemed to be part of the estate of the deceased donor passing on his death for the purpose of Section 10 of the Act. The principle is that by retaining something which he has never given	 a donor does not bring himself within the mischief of that section	 nor would the provisions of the section be attracted because of some benefit accruing to the donor on account of what was retained by him . ." 10. In the present case	 any possibilities of such an argument are ruled out by the explicit terms of the deeds. The subject matter of the deeds are not	 respectively	 11/16 share and 1/2 share in the properties. The whole of the properties are conveyed upon trust. There is	 therefore	 no scope for this submission. The first contention of Dr. Ghosh	 therefore	 fails. The second contention of Dr. Ghosh is that provisions of section 12(1) are not attracted as the properties do not fill the bill as "Settled Properties" within the meaning of Section 2(19) of the Act. Section 2(19) which defines "Settled Properties" and 'settlement '	 respectively provides: " "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;" The statutory definition of "Settled Property" and "settlement" is such that while it is possible to say that all "Settled Property" is the subject matter of "settlement"	 conversely	 however	 all subject matter of 'settlement '	 need not necessarily and proprio vigore	 become "Settled Property". The latter concept requires for its satisfaction certain specific incidents and consequences of a settlement". Section 12(1) provides: 281 12(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 . " Section 12(1) refers to and deals with a case of property passing under a "settlement" in which the settlor had reserved to himself an interest in such property either expressly or by implication. Apparently	 on its language	 the section does not draw upon the incidents and implications of "Settled Property" for the satisfaction of its requirements. The passing of property under a "settlement" which means "any disposition including a dedication or endowment whereby property is settled" coupled with a reservation of an interest in the property would suffice. The further incident that the properties covered by the settlement must in addition partake of the character of "Settled Property" and accordingly	 should stand "limited in trust for any person	 natural or juridical	 by way of succession" etc. are not to be held as part of the requirements of Section 12(1). Those incidents of "Settled Property" need not be imported into the ingredients of Section 12(1) which would be satisfied if there is a "settlement" as defined under the second part of Section 2(19) and if	 there is reservation of an interest by the settlor in addition. The two deeds clearly answer the description of 'Settlement ' as defined under Section 2(19)	 viz. that there is a "disposition including a dedication	 whereby property is settled." Indeed under both the deeds	 the reservations of the benefit of the income from the trust properties were made in favour of the settlor. These reservations by themselves	 in our opinion	 bring the properties within the net of Section 12(1). This should dispose of the second contention of Dr. Ghosh. In addition	 the settlor in this case constituted himself during his life time and thereafter constituted his heirs as the shebaits of the two deities. Indeed where while endowing properties to a deity	 the settlor stipulates that he shall during his life time and thereafter his heirs be the shebaits of the deity	 the settlor can possibly be said to provide not only for certain duties to be vested in connection with the endowment 282 but also secures a beneficial interest in the property. The following observations of Mukherjea	 J. in Angurbala Mullick vs Debabrata Mullick	 at 1132 as to the nature of the office of a shebait may be recalled: ". The exact legal position of a shebait may not be capable of precise definition but its implications are fairly well established. It is settled by the pronouncement of the Judicial Committee in Vidya Varuti vs Balusami that the relation of a shebait in regard to debutter property is not that of a trustee to trust property under the English Law. In English Law the legal estate in the trust property vests in the trustee who holds it for the benefit of cestui gue trust. In a Hindu religious endowment on the other hand the entire ownership of the dedicated property is transferred to the deity or the institution itself as a juristic person and the shebait or mahant is a mere manager. But though a shebait is a manager and not a trustee in the technical sense	 it would not be correct to describe the shebaitship as a mere office. The shebait has not only duties to discharge in connection with the endowment	 but he has a beneficial interest in the debutter property . " Again	 in Kalipada Chakraborti & Anr. vs Palani Bala Devi & Ors.	 at 516 & 517 it was held: ". Whatever might be said about the office of a trustee	 which carries no beneficial interest with it	 a shebaitship	 as is now well settled	 combines in it both the elements of officer and property . " ". There could be no doubt that there is an element in the shebaiti right which has the legal characteristics of property; but shebaitship is property of a peculiar and anomalous character	 and it is difficult to say that it comes under the category of immovable property as it is known in law . " 13. It is true that the reservation of "interest"	 so as to attract Section 12(1)	 must be in the property as such and that mere collateral benefits reserved by the settlor emanating from some other property or some other source	 independent of the property so settled	 will not 283 attract the section. In Controller of Estate Duty vs R. Kanakasabai & Ors.	 at 257 this Court	 in the context of Section 10	 observed: ". The provisions for annual payments and maintenance made in the deeds as seen earlier are not charged on the properties settled. Hence the deceased cannot be said to have retained and interest in the properties settled. Therefore	 it cannot be said that he retained any benefit either in the properties settled or in respect of their possession . " But in the present case	 benefits reserved emanate from the very properties constituting the subject matter of the settlements and cannot be said to be collateral in their nature. The distinction between a case of a benefit arising "collaterally" and a case of the benefit being reserved by "implication" would require to be kept clearly distinguished. Having regard to the special nature of the office of a shebait and the rights and interests that to with it	 it is possible to contend that when a settlor endows the property to an idol and reserves the right of shebaitship to himself	 he would be reserving an interest in the property. It is	 no doubt	 true that while dealing with a case of cessor of interest	 under section 7 of the Act	 of an elected Mahant in Math properties	 it was held by this court that no interest passes on the death of Mahant duly elected	 and that the provisions of the Act are not attracted (See: Controller of Estate Duty	 Bihar vs Mahant Umesh Narain Puri	 But the case of a settlor who himself endows property to an idol and constitutes himself a shebait is obviously different. But we need not	 in this case	 finally pronounce on the effect of reservation of shebaitship by a settlor in the context of Section 12(1). But even to the extent	 the argument that for purpose of Section 12(1) the property must answer the description of "settled property" goes the expression "by way of succession" import of the words were stated in Attorney General vs Owen	 (See 1899 2 Queen 's Bench Division 253 at 266) by Kennedy	 J: ". "By way of succession" seems to me to be a phrase to which one ought	 in dealing with this Act	 not to assign a narrow or strictly technical meaning	 but to treat it as equivalent to "successively upon death"; and substantially un 284 der the present will the property out of which the annuities are paid is property to which	 so far as benefit is concerned	 the annuitants are entitled during life	 and which	 so far as benefit is concerned	 passes to the residuary devisees upon the deaths of the annuitants. There is a succession	 in a popular but correct sense	 in the enjoyment of this portion of the testatrix 's residuary estate which comes to them upon the decease of the annuitants . " Following this view	 the Allahabad High Court in Hamid Hussain vs Controller of Estate Duty	 held (See at 315): ". The settlor clearly contemplated that successive generations would enjoy the benefit of the wakf and thereafter it would pass to the persons covered by the charitable purposes. It seems to us that upon these considerations the property must be considered to be "settled property" and the wakf	 being a dedication of endowment	 must be considered to be a settlement within the meaning of section 2(19). Inasmuch as the property comprised in the wakf passes under a settlement	 it is property which falls within the scope of section 12 . " The terms of the two documents in our opinion satisfy even this extended requirement of the case. What remains to be considered is the third contention of Dr. Ghosh. Learned Counsel says that	 at all events	 all the properties covered by the two settlements cannot be held to pass under Section 12(1) but only the value of the share of the properties corresponding to the benefit reserved must be held to pass. There are again certain fallacies in some of the assumptions basic to this contention. The quantum of the interest reserved does not determine the extent of the property passing under Section 12(1). This is not a case where several distinct properties or parcels are settled and a beneficial interest is reserved out of one alone when it might be possible to predicate that all properties comprised in such settlement	 which must be held to be a composite deed dealing with several items do not attract Section 12(1) but only the parcel out of which an interest is carved out and reserved for the settlor 's benefit. Under Section 12(1) if the deceased makes a settlement and reserves for himself an interest therein for life or for 285 any period determinable with reference to death	 the whole of the property so settled would be deemed to pass. The interest reserved might be very small indeed; but however small the interest	 when by virtue of such a reservation a settlement falls within the purview of Section 12	 the whole property would be deemed to pass. This is what was clarified in Attorney General vs Earl Grey	 at 32. ". But it is to be observed that the words are "an interest in such property." Any interest however small will do	 provided it issues out of such property that is	 out of the property sought to be taxed. I agree that if several parcels of land be given by one and the same deed of gift	 and an interest be reserved to the donor out of one of those parcels only	 estate duty would not be payable upon the whole subject matter of the gift	 but only out of that specific portion in which the interest is expressed to be reserved. But that is not the case here . " The expression 'interest ' in Section 12(1) is also not used in a restrictive sense. Wills	 J. in Attorney General vs Heywood	 said: ". This application of the word 'interest ' is not confined to a vested or a necessarily contingent interest. The Act was meant to cast a wider net than such a construction would imply . . . The Act of Parliament was meant to meet cases in which an interest of some sort was conferred and which were not already provided for	 and I think the language used is sufficiently comprehensive to include the present case . " This colloquial and somewhat liberal connotion of 'interest ' was adopted and followed in Attorney General vs Farrel	 Greer	 L.J. said: "In that case the only interest which the settlor retained in the sum of money settled by him was the expectation	 well founded or ill founded	 that the trustees would exercise their discretion in his favour; but the trustees might quite lawfully have refused to give him anything	 and have distributed the income among his wife and children. He had a mere expectation that the discretion which was vested in 286 the trustees might be exercised in his favour	 either partly or entirely	 and that in my judgment is exactly the position that Major Alfred Stourton was in this case. He had no legal right to force the trustees to give him anything; at the same time he had in a colloquial sense an interest in the estate	 because it was an estate out of which something might be allotted to him in the discretion of the trustees. Whether that is an interest within the meaning of the Act of 1881 has	 I think	 been determined by Attorney General vs Heywood	 and the decision has stood since the year 1887	 a period of forty three years. " There is	 thus	 no substance in the third contention either. In the result	 for the foregoing reasons	 Civil Appeal 1251 of 1975 of the Deputy Controller of the Estate Duty is allowed and the question referred for the opinion is answered in the affirmative and against the assessee. We hold that while the High Court was right in its view that the properties covered by the deed dated 21.9.1953 were required to be brought to charge under Section 12(1)	 we are unable to agree with the reasoning of	 and the conclusion reached by	 the High Court in regard to the properties covered by the deed dated 4.10.1959. Accordingly while CA No. 946 (NT) of 1975 brought by the accountable person is dismissed; CA 1251 of 1975 by the revenue succeeds and is allowed and the judgment of the High Court	 to the extent it pertains to the properties covered by deed	 dated 4.10.1959	 is set aside. In the circumstances	 there will be no order as to costs in these appeals.

Summary:
A person during his lifetime executed trust deeds	 dated 21.9.53 and 4.10.1959 respectively. Under the Deed dated 21.9.1953 that person as settlor	 transferred upon trust to himself as trustees four items of immovable property. The objects and purposes of the trust broadly stated were the conduct of the daily worship of the deity	 carrying out of certain charitable acts and making of provisions for the maintenance of the settlor and some other persons. The trustee was required after defraying taxes etc. to accumulate 1/4th of the net income to be set apart for purposes of effecting certain additions and alterations to the properties; to make over another 1/4th of the net income to the shebait for the conduct of the daily pooja; another 1/4th for the charities and the remaining 1/4th for the personal benefit of the settlor during his lifetime and to his heirs thereafter. Later on the share of the settlor was changed to 5/16. Under the deed dated 4.10.1959 the settlor transferred upon trust to himself and his son	 the appellant in Civil Appeal No. 946 of 1975	 as trustees six other properties	 almost for the same purposes and kept a fixed share for the benefit of the settlor during his lifetime and thereafter to his heirs. In the proceedings of assessment to Estate Duty the question arose whether the trust deeds attracted and fell within 270 section 12(1) of the Estate Duty Act. The Deputy Controller of Estate Duty	 the Appellate Controller of Estate Duty in the first appeal and the Income tax Appellate Tribunal	 Calcutta	 in the second appeal held that the entire subject matter of the deeds must be held	 or deemed	 to pass on death and the value of the properties should be included in the principal value of the Estate passing on death. At the instance of the accountable person	 a reference was made to the High Court for opinion as to whether the properties comprised in both the trust deeds were dutiable under section 12(1) of the Act. The High Court held that properties comprised in the deed dated 21.9.1953 were settled property within the meaning of section 2(19) and that section 12(1) was attracted. In relation to the properties covered by the deed dated 4.10.1959	 the High Court held that Section 12(1) was not applicable to them as they were not settled properties. Feeling aggrieved	 both the accountable person and the Deputy Controller of Estate Duty filed these cross appeals. Dismissing the appeal of the accountable person	 allowing that of the Revenue	 and answering the question referred to by the High Court for opinion in the affirmative and against the assesee	 this Court	 ^ HELD: The first contention of the accountable persons that the interest in the property corresponding to the benefit retained by the settlor was not a subject matter of the disposition at all is essentially a matter of construction of the deeds. There is	 no doubt	 a discernible difference between a case of settlement of property with reservation of a benefit to the settlor on the one hand and the case where what is settled is only a share or interest or part of the property	 excluding the part or the share corresponding to the benefit that the settlor has chosen to retain. There is	 indeed	 no transfer at all in the latter case. The accountable person contends that there is really no transfer of the share corresponding to the benefit reserved in both the cases. [278F G] In the present case	 any possibilities of such an argument are ruled out by the explicit terms of the deeds. The subject matter of the deeds are not 11/16 share and 1/2 share in the properties respectively. The whole of the properties are conveyed upon trust. There is	 therefore	 no scope for this submission. [280C D] St. Aubyn vs Attorney General	 [1951] 2 All England Reports 496; Controller of Estate Duty	 A.P. Hyderabad vs Smt. Godavari Bai; 	 at 635 and Controller of Estate Duty	 Kerala vs M/s. R.V. Vishwanathan and Ors.	 ; at 97 and 99	 referred to. 271 The second contention of the accountable person that provisions of section 12(1) are not attracted as the properties did not fill the bill as "Settled Properties" within the meaning of Section 2(19) has no substance. Section 12(1) refers to and deals with a case of property passing under a "settlement" in which the settlor had reserved to himself an interest in such property either expressly or by implication. Apparently	 on its language	 the section does not draw upon the incidents and implications of "Settled Property" for the satisfaction of its requirements. The passing of property under a "settlement" which means "any disposition including a dedication or endowment whereby property is settled" coupled with a reservation of an interest in the property would suffice. The further incident that the properties covered by the settlement must in addition partake of the character of "Settled property" and accordingly	 should stand "limited in trust for any person	 natural or juridical	 by way of succession" etc. are not to be held as part of the requirements of section 12(1). Those incidents of "Settled Property" need not be imported to the ingredients of section 12(1) which would be satisfied if there is a "Settlement" as defined under the second part of section 2(19) and if	 there is reservation of an interest by the settlor in addition. [280D; 281C E] In the instant case	 the two deeds clearly answer the description of "Settlement" as defined under Section 2(19) viz. that there is a "disposition including a dedication	 whereby property is settled". Indeed under both the deads	 the reservations of the benefit of the income from the trust properties were made in favour of the settlor. These reservations by themselves	 in our opinion	 bring the properties within the net of section 12(1). In addition	 the settlor in this case constituted himself during his life time and thereafter constituted his heirs as the shebaits of the two deities. Indeed where while endowing properties to a deity	 the settlor stipulates that he shall during his left time and thereafter his heirs be the shebaits of the deity	 the settlor can possibly be said to provide not only for certain duties to be vested in connection with the endowment but also secures a beneficial interest in the property. [281F H; 282A] Angurbala Mullick vs Debabrata Mullick	 at 1132 and Kalipada Chakraborti & Anr. vs Palani Bala Devi The reservation "interest"	 so as to attract Section 12(1)	 must be in the property as such and that mere collateral benefits reserved by the settlor emanating from some other property or some other source	 inde 272 pendent of the property so settled	 will not attract the section. The distinction between a case of a benefit arising "collaterally" and a case of the benefit being reserved by "implication" would require to be kept clearly distinguished. [282H; 283A	 C] Controller of Estate Duty vs R. Kanakasabai & Ors.	 at 257	 referred to. The terms of the two documents satisfy even the extended requirement that for purposes of section 12(1) the settled property must be by way of succession. [284E] Attorney General vs Owen	 [1899] 2 Queen 's Bench Division 253 at 266 and Hamid Hussain vs Controller of Estate Duty	 at 315	 referred to. There is no substance in the 3rd contention also of the accountable person that all the properties covered by the two settlements cannot be held to pass under section 12(1) but only the value of the share of the properties corresponding to the benefit reserved must be held to pass. There are certain fallacies in some of the assumptions basic to this contention. The quantum of the interest reserved does not determine the extent of the property passing under Section 12(1). This is not a case where several distinct properties or parcels are settled and a beneficial interest is reserved out of one alone when it might be possible to predicate that all properties comprised in such settlement	 which must be held to be a composite deed dealing with several items do not attract section 12(1) but only the parcel out of which an interest is carved out and reserved for the settlor 's benefit. Under Section 12(1) if the deceased makes a settlement and reserves for himself an interest therein for life or for any period determinable with reference to death	 the whole of the property so settled would be deemed to pass. The interest reserved might be very small indeed; but however small the interest	 when by virtue of such a reservation a settlement falls within the purview of section 12	 the whole property would be deemed to pass. [284F H; 285A B] Attorney General vs Earl. Grey	 at 325	 referred to. The expression 'interst ' in section 12(1) is also not used in a restrictive sense. [285D] Attorney General vs Heywood	 and Attorney 273 General vs Farrel	 	 referred to.