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Issues Involved:
1. Inclusion of the value of the share of the lineal descendant in the joint family property under section 34(1)(c) of the Estate Duty Act for rate purposes. 2. Deductibility of estate duty chargeable under section 5 of the Estate Duty Act for computing the principal value of the property passing on the death of the deceased. 3. Valuation of the Neel Bagh Palace. Issue-wise Detailed Analysis: Issue 1: Inclusion of the value of the share of the lineal descendant in the joint family property under section 34(1)(c) of the Estate Duty Act for rate purposes. The court examined whether the value of the adopted son's share in the joint family property should be included in the principal value of the estate for rate purposes under section 34(1)(c) of the Estate Duty Act. The court noted that Maharaja Pateshwari Prasad Singh was a member of a Hindu Undivided Family (HUF) governed by the Mitakshara law, and his adopted son had a one-third share in the coparcenary property. Section 34(1)(c) mandates that the interest in the joint family property of all lineal descendants of the deceased should be aggregated to form one estate for determining the estate duty rate. The court rejected the contention that the Hindu Succession Act, 1956, abrogated the concept of coparcenary property, noting that sections 6 and 30 of the Act did not disrupt the coparcenary but only allowed for testamentary disposition of a coparcener's share. Consequently, the interest of the adopted son was rightly aggregated with the principal value of the deceased's estate. Issue 2: Deductibility of estate duty chargeable under section 5 of the Estate Duty Act for computing the principal value of the property passing on the death of the deceased. The court referred to several precedents, including decisions from the Madras, Karnataka, Andhra Pradesh, and Gujarat High Courts, which consistently held that the estate duty chargeable under section 5 of the Estate Duty Act could not be deducted for computing the principal value of the property passing on the death of the deceased. The court found no reason to depart from this established view and held that the estate duty chargeable under section 5 was not deductible for this purpose. Issue 3: Valuation of the Neel Bagh Palace. The court addressed the method of valuing the Neel Bagh Palace, a self-occupied property subject to the U.P. (Temporary) Control of Rent and Eviction Act, 1947. The Tribunal had valued the palace by applying a multiple to the annual value worked out for municipal assessment purposes. However, the court referred to its earlier decision in P. D. Singhania v. CIT, which held that municipal assessment valuation was not a safe guide for determining the fair market value of properties governed by the U.P. Rent Control Act. The court distinguished the U.P. Rent Control Act from the West Bengal Rent Control Act, noting that the former did not restrict landlords from agreeing to rents higher than the annual reasonable rent, nor did it impose penal consequences for such agreements. Therefore, the principle laid down by the Supreme Court in Corporation of Calcutta v. Smt. Padma Debi, which was based on the West Bengal Rent Control Act, was not applicable. The court concluded that the value of the Neel Bagh Palace could not be determined solely based on municipal assessment by applying a multiple to its net annual letting value. Conclusion: The court answered the first two questions in the affirmative, supporting the inclusion of the son's share in the principal value of the estate and the non-deductibility of estate duty. For the third question, the court held that while the U.P. Rent Control Act applied to the Neel Bagh Palace, its value could not be determined based on municipal assessment alone. The department was awarded costs of Rs. 200, with the counsel's fee assessed at the same figure.
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