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Interpretation of provisions under sections 34 and 35(3) of the Estate Duty Act regarding the allowance of rebate in the case of property passing on the death of a person consisting of agricultural land. Analysis: The judgment delivered by the High Court of Andhra Pradesh addresses the issue raised by the Revenue under section 64(1) of the Estate Duty Act concerning the allowance of rebate under section 35(3) of the Act in light of the provisions of section 34. The case involved the computation of the principal value of an estate where the deceased, a member of a Hindu Undivided Family, had both joint family property and separate properties. The Asst. Controller initially did not allow a rebate under section 35(3) as the principal value exceeded Rs. 2,00,000. However, the Appellate Controller reversed this decision, stating that the value of lineal descendants' shares should not be considered for the rebate calculation, leading to an appeal and subsequent reference to the High Court. Upon examining sections 34 and 35(3) of the Estate Duty Act, the court noted that section 35(3) allows a rebate for property passing on the death of a person, including agricultural land, if the principal value does not exceed Rs. 2 lakhs. The court emphasized that the rebate should be based solely on the property passing on the deceased's death, without adding the value of lineal descendants' property. In contrast, section 34 deals with the aggregation of properties for determining the rate of estate duty, where the value of lineal descendants' property is considered. The court cited precedents from various High Courts supporting the interpretation that the rebate under section 35(3) should only consider the principal value of the deceased's property. Referring to a decision by the Delhi High Court, the judgment reiterated that the aggregation under section 34 is for rate determination purposes and does not alter the liability of the deceased's property to estate duty. Therefore, the court concluded that for granting the rebate under section 35(3), only the principal value of the property passing on the deceased's death should be considered. The court held that the rebate is allowable irrespective of the provisions of section 34, and the value of lineal descendants' property is relevant only for determining the rate of estate duty, not for rebate eligibility. In conclusion, the High Court answered the question in the affirmative, affirming that the rebate under section 35(3) of the Estate Duty Act is allowable regardless of the provisions of section 34. The judgment favored the assessee, emphasizing the importance of considering only the principal value of the deceased's property for rebate calculation, while the value of lineal descendants' property is relevant for rate determination purposes only.
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