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Issues Involved:
1. Valuation of shares in Shanthi Theatres Private Limited. 2. Deductibility of Rs. 2,55,000 in the computation of the principal value of the estate of the deceased. Issue-Wise Detailed Analysis: 1. Valuation of Shares in Shanthi Theatres Private Limited: The first question addressed whether the shares in Shanthi Theatres Private Limited could be valued at Rs. 1,500 per share, leading to an inclusion of Rs. 3,37,500 in the value of the estate passing. The deceased owned 225 shares in the company, which had suffered losses in 1960 and 1961. The accountable person valued the shares at Rs. 1,000 per share for estate duty purposes, based on a break-up value of Rs. 827 per share. However, the Assistant Controller of Estate Duty considered the fair market value to be Rs. 1,500 per share, noting the increase in the value of the company's assets and the fact that the accountable person sold her shares at Rs. 1,500 per share after the deceased's death. The Tribunal upheld this valuation, noting that the break-up value method was not appropriate for a going concern and that the sale of shares at Rs. 1,500 per share indicated the real worth of the shares. The court agreed with the Tribunal, stating that the break-up value method is suitable only when a company is ripe for winding-up or when profit-earning capacity cannot be reasonably estimated. The court found no evidence of significant price variation between the date of death and the sale date, thus affirming the valuation of Rs. 1,500 per share. The first question was answered in the affirmative and against the accountable person. 2. Deductibility of Rs. 2,55,000 in the Computation of the Principal Value of the Estate: The second question involved whether the sum of Rs. 2,55,000 was a proper deduction in the computation of the principal value of the estate. The deceased had entered into a marriage settlement in 1945, which was later revoked in 1954 with the consent of his wife. The revocation deed did not include any condition for the deceased to pay Rs. 4 lakhs to his wife. However, a note dated September 13, 1954, indicated an agreement for an outright payment of Rs. 4 lakhs. The Tribunal considered the original 1945 settlement and the 1954 revocation, concluding that the 1954 arrangement substituted the original settlement and was enforceable. The court disagreed, stating that the 1954 revocation deed was not conditional upon any payment and that the note from September 1954 did not constitute an enforceable agreement. The court found that any agreement for payment recorded in the note was without consideration, as the wife had already given up her rights under the original settlement. Therefore, the accountable person was not entitled to deduct Rs. 2,55,000 as a debt due by the deceased. The second question was answered in the negative and against the accountable person. Conclusion: The court upheld the valuation of the shares at Rs. 1,500 per share and denied the deduction of Rs. 2,55,000 from the estate's value. The Revenue was awarded costs from the accountable person, with counsel's fee set at Rs. 500.
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