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Issues Involved:
1. Applicability of Section 33(1)(n) of the Estate Duty Act, 1953, to the dwelling house of a Hindu undivided family (HUF). 2. Determination of the share of the deceased in the joint family properties. 3. Aggregation of the interests of lineal descendants for estate duty purposes. Detailed Analysis: 1. Applicability of Section 33(1)(n) of the Estate Duty Act, 1953: The core issue was whether the exemption under Section 33(1)(n) should be applied before or after determining the deceased's share in the joint family properties. Section 33(1)(n) provides an exemption for one house or part thereof used exclusively by the deceased for residence. The Tribunal had allowed the full value of the house property (Rs. 1,40,000) as exempt under this section, as the property was located in a place with a population less than 10,000. The court held that the exemption under Section 33(1)(n) should be applied in computing the value of the joint family properties before determining the deceased's share. This interpretation aligns with the decision in CED v. Estate of late R. Krishnamachari, where the court emphasized that properties exempt under Section 33(1) should be excluded from the total value of the joint family properties before determining the share of the deceased. 2. Determination of the Share of the Deceased: Section 39 of the Estate Duty Act outlines the method for valuing the coparcenary interest in joint family properties. The value of the deceased's share is determined as if a partition had occurred immediately before the death. According to Section 39(3), the entire joint family property is considered as if it belonged to the deceased for valuation purposes. The Assistant Controller initially computed the deceased's half share in the HUF properties at Rs. 2,20,737, excluding Rs. 70,000 (half share of the dwelling house) and Rs. 1,000 for funeral expenses. The Tribunal later revised this computation, allowing the full exemption of Rs. 1,40,000 for the dwelling house, reducing the value of the joint family properties to Rs. 3,01,474, and thereby determining the deceased's half share at Rs. 1,50,737. 3. Aggregation of Interests of Lineal Descendants: Section 34(1) of the Estate Duty Act requires the aggregation of the interests of lineal descendants with that of the deceased for determining the estate duty rate. However, Section 34(1)(c) was struck down by the court in Devaki Ammal v. Asst. CED as violative of Article 14 of the Constitution. Despite this, the revenue argued that the provision should still be considered due to the pending appeal in the Supreme Court. The court noted that the aggregation provision would not apply until the Supreme Court's decision. Therefore, the estate duty was computed without considering the aggregation of the lineal descendants' shares. The court reiterated that the exemption under Section 33(1)(n) should be applied before determining the share of the deceased, thus affecting the aggregation process. Conclusion: The court concluded that the exemption under Section 33(1)(n) should be allowed only to the extent of the deceased's share in the joint family properties. The value of the joint family properties must be computed first, applying the exemption, and then the deceased's share should be determined. The final duty payable was calculated based on this interpretation, ensuring that the exemption is fully utilized within the legal framework. There was no order as to costs.
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