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Issues Involved:
1. Whether the Tribunal legally erred in holding that if an exemption is available to a Hindu joint family in respect of a residential house, its value being less than Rs. 1 lakh, no valuation in respect of the same could be brought in the estate of the deceased HUF either for tax or aggregation. Issue-wise Detailed Analysis: 1. Exemption of Residential House Value for Estate Duty: The core issue revolves around whether the value of a residential house, exempt under Section 33(1)(n) of the Estate Duty Act, 1952, should be considered for aggregation purposes under Section 34(1)(c) when determining the rate of estate duty on the taxable estate of a deceased Hindu joint family (HUF) member. Facts: - Barkat Ram Khanna, a member of an HUF, died in July 1976. - His son, the accountable person, filed an estate duty return showing the principal value of the estate at Rs. 1,39,198. - The HUF owned half of a residential property valued at Rs. 35,153, with the other half owned by Barkat Ram's brother. - The accountable person claimed that since the property's value was below Rs. 1 lakh, it was exempt from estate duty and should not be aggregated with the taxable estate. Assistant CED's Determination: - The Assistant Controller of Estate Duty (CED) valued the deceased's half share at Rs. 55,250. - An exemption under Section 33(1)(n) was allowed for the deceased's share. - However, Rs. 27,625, representing the lineal descendants' share, was added for aggregation under Section 34(1)(c). Tribunal's Decision: - The Tribunal upheld the accountable person's appeal, deleting the addition of Rs. 27,625. - It held that if the exemption applies, no valuation for tax or aggregation purposes should be brought into the estate. Legal Precedents: - The Tribunal noted differing opinions between the Karnataka High Court (CED vs. K. Nataraja) and the Andhra Pradesh High Court (CED vs. Estate of Late Durga Prasad Beharilal). - It adopted the Andhra Pradesh High Court's view favoring the assessee, which excluded the value of the entire house from the net principal value of the estate. High Court's Analysis: - The High Court examined Sections 33(1)(n) and 34(1) of the Act. - Section 33(1)(n) provides exemption for one house or part thereof used by the deceased for residence if its value does not exceed Rs. 1 lakh. - Section 34(1)(c) mandates aggregation of the interests in the joint family property of all lineal descendants of the deceased for estate duty rate determination. Contrary Views: - Karnataka High Court in K. Nataraja's case and other High Courts like Allahabad, Madhya Pradesh, Patna, Rajasthan, and Gujarat held that only the deceased's share is exempt, and the lineal descendants' share should be aggregated for rate purposes. - They argued that the exemption under Section 33(1)(n) applies only to the deceased's interest, not the entire property. Conclusion: - The High Court agreed with the Karnataka High Court and other similar judgments, rejecting the Andhra Pradesh High Court's view. - It concluded that the Tribunal erred in its decision. - The value of the lineal descendants' interest in the residential house should be aggregated for determining the estate duty rate. Judgment: - The High Court answered the referred question in the affirmative, in favor of the Revenue and against the assessee. - It held that the valuation of the residential house exempt under Section 33(1)(n) should be considered for aggregation purposes under Section 34(1)(c) for determining the rate of estate duty. No Costs: - The judgment concluded with no order as to costs.
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