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Issues: Interpretation of exemption under section 33(1)(n) of the E.D. Act, 1953 for property gifted before death.
Analysis: The case involved a dispute regarding the application of the exemption under section 33(1)(n) of the E.D. Act, 1953 to a property gifted by the deceased before his death. The deceased had gifted a property to his son and daughters, with part of the property, including a building, falling to one of the daughters. The deceased continued to reside in the property until his death. The Asst. Controller initially granted an exemption under section 33(1)(n), but the Appellate Controller issued an enhancement notice, withdrawing the exemption. The Tribunal held that the deceased was entitled to the exemption as the property was exclusively used by him for residence at the time of the gift, applying legal fictions under sections 9, 3(3), and 33 of the Act. The primary issue revolved around the interpretation of section 33(1)(n) which provides an exemption for "one house or part thereof exclusively used by the deceased for his residence." The revenue contended that for the exemption to apply, the property must belong to the deceased at the time of his death and must be exclusively used by him for residence. However, the accountable person argued that the legal fictions created by sections 3(3) and 9 should be considered, treating the property as belonging to the deceased till his death. It was contended that the deceased's possession at the time of the gift should be deemed to continue until his death, thereby satisfying the conditions for the exemption. The Court analyzed the provisions of section 33(1)(n) and emphasized the requirement of exclusive use by the deceased for residence at the time of his death. The Tribunal's finding that the property belonged to someone else and the deceased was a permissive user was considered. The Court highlighted that mere permissive use does not fulfill the requirement of exclusive user under the provision. Additionally, the absence of proof of exclusive user by the deceased as of right led to the conclusion that the exemption criteria were not met in this case. The Court rejected the Tribunal's construction of the provision and held that the deceased's permissive use did not qualify as exclusive use under section 33(1)(n). Ultimately, the Court ruled against the accountable person, stating that the exemption under section 33(1)(n) was not applicable in this case. The judgment clarified the strict requirement of exclusive use by the deceased for residence at the time of his death to qualify for the exemption. The decision focused on the specific facts of the case and the legal interpretation of the relevant provisions of the E.D. Act, 1953.
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