1989 (3) TMI 12 - HC - Income Tax

Summary

Issues:
1. Interpretation of provisions of section 10 and section 12 of the Estate Duty Act, 1953 regarding the inclusion of the deceased's interest in a property gifted to a school in the estate.
2. Application and correct interpretation of section 33(1)(n) of the Estate Duty Act, 1953 concerning the exemption of a deceased's share in an ancestral house.

Analysis:

Issue 1:
The case involved a dispute regarding the inclusion of the deceased's interest in a property gifted to a school in the estate under sections 10 and 12 of the Estate Duty Act, 1953. The Assistant Controller valued the property at Rs. 10,000, considering the donor had retained his interest in the gift. However, the Appellate Controller viewed the gift as transferring the use of the property to the school, estimating the donor's interest at Rs. 1,000. Upon appeal, the Tribunal held that the donor's interest, if any, should be included under section 12 of the Act, not section 10. The Tribunal found the Appellate Controller's valuation reasonable at Rs. 1,000, concluding that section 10 was inapplicable in this case. The High Court upheld the Tribunal's decision, deeming it reasonable based on the facts presented.

Issue 2:
The second issue revolved around the exemption of the deceased's share in an ancestral house under section 33(1)(n) of the Act. The Appellate Controller had determined that the deceased was not residing in the ancestral house at the time of death, as it was occupied by the nephew. The Controller rejected the claim of exemption. However, the accountable person contended that the house was reserved for use, qualifying for exemption under section 33(1)(n). The Tribunal sided with the accountable person, excluding Rs. 35,000 from the estate's value. The High Court concurred with the Tribunal's decision, affirming that the house being reserved for use fell within the exemption criteria of section 33(1)(n). The judgment favored the assessee on both issues, upholding the Tribunal's reasoned conclusions.

Both judges, SUHAS CHANDRA SEN and BHAGABATI PRASAD BANERJEE, concurred with the decision, affirming the Tribunal's findings as reasonable and in favor of the assessee.