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Issues:
1. Interpretation of Estate Duty Act, 1953 - Liability of property passing on death to estate duty. 2. Application of sections 5, 34, and 35(1) of the Estate Duty Act, 1953 in determining estate duty chargeability. Analysis: The case involved the interpretation of the Estate Duty Act, 1953 concerning the liability of property passing on death to estate duty. The deceased, a member of an undivided Hindu family, left behind property valued at Rs. 31,429, with lineal descendants' interest valued at Rs. 1,90,750. The dispute arose when the Income-tax Appellate Tribunal disagreed with the assessment by the Assistant Controller of Estate Duty and Zonal Appellate Controller, holding that the property passing on death was not assessable to estate duty under section 5, 35(1), and the Second Schedule to the Act. The Tribunal emphasized that aggregation under section 34 was only for determining the rate of estate duty, not the chargeability itself. The High Court concurred with the Tribunal's decision, emphasizing the distinction between property's liability to estate duty and the rate of assessment. It clarified that property passing on death below Rs. 50,000 was not chargeable to estate duty as per sections 5, 35(1), and the Second Schedule. The aggregation under section 34 was deemed relevant only for assessing the rate of estate duty, provided the property was independently liable to pay estate duty. Citing precedents, the Court supported its conclusion, highlighting that aggregation did not transform non-liability into liability. Conclusively, the Court answered the referred questions affirming the Tribunal's correctness in holding no estate duty chargeable under section 5 and clarifying that section 34(1) did not make the estate passing on death liable to estate duty, as it was solely for aggregation and rate determination purposes. The judgment did not award costs to any party involved in the case.
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