1982 (12) TMI 38 - HC - Income Tax

Summary

Issues:
1. Interpretation of exemption under section 33(1)(n) of the Estate Duty Act for a residential property share in an HUF.
2. Clubbing of lineal descendants' share with the deceased's share for determining the rate of estate duty.

Analysis:

Issue 1: Interpretation of exemption under section 33(1)(n):
The accountable persons challenged the valuation of the deceased's share in an HUF's residential property for estate duty purposes. The dispute revolved around whether the exemption under section 33(1)(n) should apply to the entire residential property or only to the deceased's share. The court clarified that the exemption is limited to the deceased's share in the residential property, not the entire property. This interpretation was consistent with previous decisions by various High Courts, including the Andhra Pradesh High Court and the Karnataka High Court.

Issue 2: Clubbing of lineal descendants' share for estate duty rate determination:
The second question referred to the court concerned the aggregation of lineal descendants' shares with the deceased's share for calculating the rate of estate duty, as per section 34(1)(c) of the Act. The accountable persons argued against this aggregation, relying on a previous decision. However, the court held that the clear and unambiguous language of section 34(1)(c) mandated the aggregation of lineal descendants' shares with the deceased's share for determining the estate duty rate. The court emphasized that the exemption under section 33(1)(n) and the aggregation under section 34(1)(c) operate in different contexts and must both be given effect to. This interpretation was supported by consistent rulings from various High Courts, reinforcing the correct application of the law in this matter.

In conclusion, the court ruled in favor of the Revenue, affirming the correct valuation and aggregation of shares as per the provisions of the Estate Duty Act. The judgment clarified the scope of exemptions and the aggregation of shares in the context of estate duty calculations, aligning with established legal principles and precedents from multiple High Courts.