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1979 (4) TMI 8 - HC - Income Tax

Issues:
1. Interpretation of the partition deed dated June 16, 1964 regarding the deceased's share in the Kakinada house.
2. Application of Section 7 and Section 11(1) of the E.D. Act, 1953 to determine the estate duty liability.

Analysis:
The judgment pertains to a reference made by the Income-tax Appellate Tribunal, Hyderabad, regarding the inclusion of the entire value of a property in the estate of the deceased or only a 1/5th share. The deceased and his brothers were part of a HUF, and through various partition deeds, the properties were divided. The key contention was whether the deceased had a life interest in the Kakinada house or only a 1/5th share. The Assistant Controller initially included the entire value of the house in the estate, which was affirmed by the Appellate Controller but later overturned by the Tribunal.

The Tribunal held that the partition deed of June 16, 1964, indicated that the deceased and his sons were tenants in common, not coparceners, and the deceased had only a 1/5th share in the Kakinada house. The Tribunal rejected the revenue's argument that Section 7 and Section 11 of the E.D. Act applied, stating that only a 1/5th share should be included in the estate. The High Court agreed with the Tribunal's interpretation, emphasizing that the deed of partition was genuine and valid, not a scheme to evade estate duty.

Regarding the application of Section 11(1) of the Act, the revenue argued that the partition deed amounted to a disposition or determination of the deceased's interest, thus the entire value of the Kakinada house should be included in the estate. However, the Court held that the deed did not diminish the deceased's interest but rather enlarged it, as he acquired an absolute 1/5th share in the Kakinada house. The Court cited legal commentary to support its interpretation, concluding that only the 1/5th share should be considered for estate duty purposes.

In summary, the Court ruled that only the deceased's 1/5th share in the Kakinada house should be included in the principal value of the estate, rejecting the revenue's argument and ruling in favor of the accountable person. No costs were awarded in the judgment.

 

 

 

 

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