V. Ramaswami, J.:— One S.M Muthiah Chettiar, who was domiciled in India, passed away on November 15, 1963. His wife filed the estate duty account as the accountable person. In the return, the accountable person included certain immovable properties, shares in companies and outstandings, which were in her name, also as the estate passing on the death of her husband. Later on, she claimed that the value of the assets standing in her name should be excluded on the ground that though the consideration for purchasing those assets proceeded from the deceased, he intended to give them to her as gift and that, therefore, they were her absolute properties and could not be included in the estate of the deceased.

2. The Assistant Controller of Estate Duty, after considering a number of circumstances including a will, in which the deceased claimed all these properties as his and standing benami in the name of his wife, came to the conclusion that these assets were purchased by the deceased benami in the name of his wife and that they actually belonged to the deceased. Alternatively, the Assistant Controller also held that even if it were to be assumed that the deceased had gifted them to his wife, the subsequent conduct of the deceased in dealing with these assets in his books of account, possessing and enjoying the income therefrom, as if they were his own, clearly attracted the provisions of section 10 of the Estate Duty Act. Accordingly, he included these assets in the principal value of the estate of the deceased passing on the death. The deceased was a partner in a rice-mill for a number of years. On the ground that the running of a rice-mill required various licences and that the partnership firm was not only hulling paddy for others but also purchasing paddy and converting them into rice and selling the same, the Assistant Controller found that the rice-mill business had acquired goodwill and he proceeded to estimate the value of the goodwill. Rejecting the contention of the assessee that the goodwill, if it is to be taken into account, is to be estimated at two years' profit or three years' average income, the Assistant Controller estimated it at three years' profit and fixed the amount at Rs. 14,115.

3. On appeal, the Appellate Controller of Estate Duty, while agreeing with the Assistant Controller that the rice-mill business had acquired goodwill, estimated the value of the goodwill at Rs. 9,410. On the question whether the assets standing in the name of the wife of the deceased were acquired by him benami in her name, the Appellate Controller, agreeing with the Assistant Controller, also held that they were benami transactions and that the real owner was the deceased. The Appellate Controller also stated that even if, for the sake of argument, it was to be considered that those assets were gifts made by the deceased, since the deceased had not been entirely excluded from possession and enjoyment of the assets, the provisions of section 10 were attracted. In that view, he confirmed the order of the Assistant Controller in effect and substance.

4. Before the Tribunal, it does not appear that the finding that the assets were purchased by the deceased benami in the name of his wife had been questioned. In any case, the Tribunal has not proceeded to consider the benami nature with regard to the assets, but considered the question as to whether those assets would have to be included in the principal value of the estate passing on the death of the deceased on the basis that the accountable person was a benamidar in respect of the assets and that the real owner was the deceased. After citing a number of decisions, the Tribunal ultimately came to the conclusion that in the case of properties standing in the name of a benamidar, the deceased, the real owner, could not be said to be competent to dispose of those assets. It further held:

“Section 5 is the charging section and sections 6 to 17 are merely various categories of properties which could be said to pass or deemed to pass on the death. In other words, one has to read together sections 3(3), 5 and any one or other of sections 6 to 17. If an item of property would not ‘come under any one of sections 6 to 17 that property cannot be said to pass’.”

5. In the case of a benami transaction, according to the Tribunal, the real owner is not a person who is competent to dispose of the property, but it is the benamidar who is competent to dispose it of that means, it is the benamidar who will come under section 6, and not the real owner. In that view, the Tribunal directed the deletion of the value of these assets from the estate of the deceased.

6. On the question of goodwill, the Tribunal considered that, having regard to the fact that the rice-mill had no quota right or any peculiar features of its own, it did not have any goodwill at all and that, therefore, there was no justification for adding the sum of Rs. 9,410 on account of goodwill.

7. The revenue asked for a reference of three questions: one relating to the goodwill, the other relating to the includibility of the assets held by the deceased benami in the name of his wife and the third, the applicability of section 10. But the Tribunal considered that the following question is the only question that could be referred. That question reads as follows:

“Whether the value of the properties admittedly standing in the name of the deceased's wife could be included in the principal value of the estate assessable under the provisions of the Estate Duty Act?”

8. That is the subject-matter of reference in T.C No. 272 of 1970.

9. On an application filed by the revenue under section 64(3) of the Estate Duty Act, this court directed the Tribunal to refer the following question relating to the goodwill also.

“Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in deleting the addition of Rs. 9,410 retained on account of goodwill relating to M/s. Meenakshi Rice Mills?”

10. That is the subject-matter of reference in T.C No. 405 of 1971.

11. On the first question (question in T.C No. 272 of 1970), in view of the fact that the Tribunal, in its order, proceeded to consider the includibility of the assets standing in the name of the wife, who is the accountable person, on the basis that they were held by her benami and that the real owner was the deceased, we have to answer the question referred also only on the basis that they were held by her benami for her husband. Even in the stated case, it is, as a fact, stated that it was the admitted case that these assets were held by her benami for her husband. The question referred to us in T.C No. 272 of 1970 could not also include a challenge of the benami nature, as that was a reference asked for by the revenue. The revenue was not aggrieved by the finding;of the Assistant Controller or the Appellate Controller that the transactions were benami and that the real owner was the deceased. Therefore, if the accountable person wanted to contend that she was the real owner and she was not holding the properties as benamidar, she should have asked for a reference. In the absence of such reference, we are unable to permit the learned counsel for the accountable person to question the finding on the benami nature of the transactions.

12. The Tribunal, relying on the decisions in Smt. Shantabai Jadhav v. Controller of Estate Duty, [1964] 51 ITR (ED) 1 (AB), Smt. Denabai Boman Shah v. Controller of Estate Duty, [1967] 66 ITR 385 (AP) and B.K Shantiraj v. Controller of Estate Duty, [1968] 68 ITR 166 (Mys) and some passage from text books, held that in the case of benami transactions, the benamidar was competent to dispose of the property, that the real owner had no right to dispose it of and that, therefore, it could not be included in the principal value of the estate of the deceased. Before dealing with these decisions, we may refer to two statutory provisions relating to “benami transactions”.

13. Under section 82 of the Indian Trusts Act, 1882, the benamidar shall hold the property for the benefit of the person paying the consideration unless the person paying the consideration intended to pay or provide such consideration for the benefit of the transferee. The finding in this case being one of benami, we are relieved of the duty to find the intention of the person paying the consideration. The accountable person, therefore, must be deemed to hold the property for the benefit of her husband. That means that the real ownership to the properties is vested in the deceased.

14. Section 41 of the Transfer of Property Act deals with transfer by the ostensible owner. In the case of a benami transaction, the ostensible owner is the benamidar. That section provides that where the ostensible owner transfers the property for consideration, the transfer shall not be voidable on the ground that the transferor was not authorised to make it; provided that the transferee, after taking reasonable care to ascertain that the transferor had power to make the transfer, has acted in good faith. Thus, if a person had no actual or constructive notice of the real title and acted in good faith and purchases the property from a benamidar, the real owner cannot recover the same, though the benamidar could not convey any title in the property. The normal rule is that no one can confer better title than what he has. Section 41 is in the nature of an exception to this rule, and creates an estoppel against the real owner, who, by his act, has allowed the ostensible owner to deal with the property as if it was the property of the ostensible owner. The section also requires that the transfer shall be for consideration. In other words, only a transfer by an ostensible owner for consideration, if the purchaser proves his bona fides, gets protection under that section. The ostensible owner is not treated as owner for all purposes. If the transaction is benami, the real owner is entitled to deal with the property as if it is his own and the benamidar, subject to the exception provided under section 41, could not deal with the property in any way. The property is not vested in the ostensible owner, and it is only vested in the real owner.

15. In one of the earliest cases decided by this court in Yelamanchili Pitchayya v. Yelamanchili Rattamma, AIR 1929 Mad 268, 269 the relative rights of the benamidar and the real owner were considered, though in a case arising under the Code of Civil Procedure for adding the real owner as a party to a suit. It was held:

“A benamidar is not a trustee in the strict sense of the term. He has the ostensible title to the property standing in his name but the property does not vest in him but is vested in the real owner……………. It is well settled that the real owner could enforce his remedy in respect of property standing in the name of a benamidar without reference to the latter. If a mortgage stands in the name of a benamidar, the person for whom the mortgage was obtained could sue on the mortgage, and the same rule applies to other transactions except those forbidden by law……………. A benamidar has no interest at all in the property or transaction standing in his name.”

16. In support of these propositions, the learned judges have also cited a decision of the Privy Cauncil in Petheperumal Chetty v. Muniandy Servai, [1908] ILR 35 Cal 551, 559 (PC) wherein it was held that:

“Where a transaction is once made out to be a mere benami, it is evident that the benamidar absolutely disappears from the title. His name is simply an alias for that of the person beneficially interested.”

17. If that is the position of a real benamidar, certainly the assets now in question belonged to the deceased who died possessed of the same. Section 5 is, therefore, clearly attracted, and the entire value of these assets is includible in the principal value of the estate of the deceased passing on the death.

18. It now only remains to consider the decisions relied on by the Tribunal and some of the other decisions cited at the Bar.

19. In Smt. Shantabai Jadhav v. Controller of Estate Duty, [1964] 51 ITR (ED) 1 (AP), the accountable person who was the wife of the deceased, claimed certain jewellery left by the deceased as hers, and did not include the same in the account of the estate filed by her. The Assistant Controller, in the opinion that the accountable person had failed to establish that the consideration for the purchase of the jewellery came out of her stridhana property and that she had no ostensible resources for purchase of the same, treated the property as that of the deceased. When it came on a reference, the Andhra Pradesh High Court observed— See [1964] 51 ITR (ED) 1, 3 (AP):

“Even assuming that the money for the purchase was found by her husband, it does not mean that he had beneficial interest in the property. Normally, a husband takes a sale in the name of his wife either to make a provision for her or to screen the property from creditors ………. Whatever might be the motive, so long as the deed stands in the name of another person, it could not be said that it was competent for the deceased to dispose of the property.”

20. In another place, the learned judge observed that so long as the document stood in the name of the wife, the deceased could not dispose of the property unless he obtained a declaration that he was the real owner and that his wife was the ostensible owner. It is seen from these passages that the learned judges are of the view, in that case, that the benami nature had not been established and that the real owner was the wife, and not the deceased. If so, certainly, the revenue could not invoke any provision of the Estate Duty Act in order to include the assets of the wife in the estate of the deceased.

21. Smt. Denabai Boman Shah v. Controller of Estate Duty, [1967] 66 ITR 385 (AP) is also similar to Smt. Shantabai Jadhav v. Controller of Estate Duly, [1964] 51 ITR (ED) 1 (AP), which the learned judges followed. In that case also it was not admitted that the property was held benami by the accountable person. This decision of the Andhra Pradesh High Court also is of no assistance to the accountable person in this case.

22. The decision of the Mysore High Court in B.K Shantiraj v. Controller of Estate Duty, [1968] 68 ITR 166 (Mys) does not relate to a case of benami transaction at all and, therefore, need not be considered.

23. It may be mentioned that the above two decisions of the Andhra Pradesh High Court in Smt. Shantabai Jadhav v. Controller of Estate Duty, [1964] 51 ITR (ED) 1 (AP) and Smt. Denabai Boman Shah v. Controller of Estate Duty, [1967] 66 ITR 385 (AP) were considered by a Full Bench of the Allahabad High Court in O.S Chawla, Kanpur…-Applicant; v. Asstt. Collector Of Estate Duty…-Opposite-Party., [1973] 90 ITR 68 (All) [FB] and were distinguished. We may add that in that Full Bench decision the learned judges have considered the nature of a benami transaction and held that the benamidar is only having a nominal title to the property, but the real title vests in the person who purchased the property in the name of the benamidar and that the benamidar holds the property for the benefit of the person who had the real title to it. The Full Bench also held that in the case of benami transactions, the value of the property could be included in the estate of the real owner under section 5 of the Estate Duty Act.

24. Learned counsel for the revenue brought to our notice a decision of the Punjab High Court in Controller of Estate Duty v. M.L Manchanda, [1974] 93 ITR 173 (Punj) in a case relating to a benamidar dying where the question for consideration was whether the assets held by a benamidar could be included in the estate. A Division Bench of the Punjab High Court relying on the aforementioned two decisions of the Andhra Pradesh High Court and an earlier decision of the Allahabad High Court which was overruled in O.S Chawla, Kanpur…-Applicant; v. Asstt. Collector Of Estate Duty…-Opposite-Party., [1973] 90 ITR 68 (All) [FB] held that the property had to be treated as the estate of the benamidar on death. In support of this view, the learned judges also sought to rely on a passage in the decision of the Supreme Court in Sree Meenakshi Mills Ltd v. Commissioner of Income-tax, [1957] 31 ITR 28 (SC). We are of the view that the passage quoted from the decision of the Supreme Court was taken out of context and it, therefore, appeared as if the same supported the view expressed by the learned judges in the decision of the Punjab High Court. In order to understand it, it is necessary for us to quote the complete passage from the decision of the Supreme Court. That passage reads [1957] 31 ITR 28, 52 (SC):

“In this connection, it is necessary to note that the word ‘benami’ is used to denote two classes of transactions which differ from each other in their legal character and incidents. In one sense, it signifies a transaction which is real, as for example, when A sells properties to B but the sale deed mentions X as the purchaser. Here the sale itself is genuine, but the real purchaser is B, X being his benamidar. This is the class of transactions which is usually termed as benami. But the word “benami” is also occasionally used, perhaps not quite accurately, to refer to a sham transaction, as for example, when A purports to sell his property to B without intending that his title should cease or pass to B. The fundamental difference between these two classes of transactions is that whereas in the former there is an operative transfer resulting in the vesting of title in the transferee, in the latter there is none such, the transferor continuing to retain the title notwithstanding the execution of the transfer deed. It is only in the former class of cases that it would be necessary, when a dispute arises as to whether the person named in the deed is the real transferee or B, to enquire into the question as to who paid the consideration for the transfer, X or B. But in the latter class of cases, when the question is whether the transfer is genuine or sham, the point for decision would be, not who paid the consideration but whether any consideration was paid.”

25. It may be seen from this passage that what the learned judges of the Supreme Court referred to as a transfer resulting in vesting of title in the transferee is the benami transaction and the vesting of the title is not on the benamidar but on the real purchaser. We are, therefore, of the view that this passage in the decision of the Supreme Court in no way supports the conclusion in Controller of Estate Duty v. M.L Manchanda, [1974] 93 ITR 173 (Punj). With great respect to the learned judges there, having regard to the nature of a benami transaction, we are unable to agree with the view that the assets held by a benamidar could be included in the estate of the benamidar on death. We are, therefore, of the view that all the assets, now in dispute, would pass on the death of the deceased, as the deceased was the real owner and the accountable person was only holding them as benamidar for the real owner.

26. We are, therefore, of the opinion that the assets are to be included under section 5 of the Estate Duty Act itself. On the question of including the value of the goodwill, we are of the view that on the question as framed we could not go into the question whether there was any goodwill at all. As already stated, the Tribunal gave a finding that the rice-mill had no goodwill at all, in view of the fact that there was no quota right nor was there any peculiar feature attached to the rice-mill. The revenue has not sought a reference specifically on the question whether there was any goodwill at all and the reference before us in our opinion could not include also a question of the existence of the goodwill. If there was no goodwill, the addition of Rs. 9,410 could not be justified.

27. In the result, we answer the question in T.C No. 272 of 1970 in the affirmative and in favour of the revenue, and the question in T.C No. 405 of 1971 also in the affirmative but against the revenue. In the circumstances, there will be no order as to costs in either.