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Issues Involved: Constitutionality of section 34(1)(c) of the Estate Duty Act, 1953, particularly its compliance with Article 14 of the Constitution of India.
Issue-wise Detailed Analysis: 1. Constitutionality of Section 34(1)(c) of the Estate Duty Act, 1953: The petitioner challenged the assessment order and subsequent appellate decisions on the ground that section 34(1)(c) of the Estate Duty Act, 1953, violated Article 14 of the Constitution, which guarantees equality before the law and equal protection of the laws. 2. Aggregation of Interests for Estate Duty Calculation: The petitioner argued that section 34(1)(c) creates an invidious classification between coparceners with male lineal descendants and those without. This section mandates the aggregation of the deceased's interest in joint family property with that of the male lineal descendants for determining the estate duty rate, resulting in higher duty for those with male lineal descendants. 3. Interpretation of Article 14: Article 14 does not mandate absolute equality but requires reasonable classification. The Supreme Court has established that fiscal legislation allows for broader classification due to its complexity. The classification must be founded on reasonable differentia and must have a rational relation to the object sought to be achieved by the Act. 4. Legislative Intent and Purpose: The Estate Duty Act aims to prevent the concentration of wealth and reduce inequalities in wealth distribution. Section 34(1)(c) was introduced to remove disparities in estate duty incidence between those governed by Mitakshara law and those governed by Dayabhaga law. Under Mitakshara law, male descendants acquire interest by birth, whereas, under Dayabhaga law, inheritance occurs upon death. 5. Rationality and Object of Classification: The classification under section 34(1)(c) is based on the different inheritance laws applicable to Mitakshara and Dayabhaga schools. This classification is rational as it addresses the disparity in tax incidence and aligns with the Act's objective of equitable wealth distribution. The aggregation is a method to determine the rate of estate duty, not a levy on the descendants' property. 6. Judicial Precedents and Interpretation: The court referred to various Supreme Court rulings emphasizing judicial restraint in economic regulation and fiscal legislation. The court held that the classification under section 34(1)(c) adheres to the principles of equality and has a nexus with the Act's objective. 7. Validity of Section 34(1)(c): The court concluded that section 34(1)(c) does not violate Article 14 of the Constitution. The classification is reasonable and serves the purpose of reducing wealth concentration and ensuring equitable tax incidence. Conclusion: The writ petition was dismissed, and the court upheld the constitutionality of section 34(1)(c) of the Estate Duty Act, 1953, affirming that it does not violate Article 14 of the Constitution. The petitioner's challenge to the aggregation method for determining estate duty rates was rejected.
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