1980 (3) TMI 109 - AT - Income Tax

Summary

Issues:
1. Deduction of estate duty in computation of principal value.
2. Aggregation of interest in joint family property for estate duty calculation.

Detailed Analysis:

1. The first issue in this case pertains to the deduction of estate duty in the computation of the principal value. The Appellate Controller rejected the appellant's contention, citing the precedent of Smt. V. Pramila vs. CED, Bangalore and referring to 99 ITR 221. The Karnataka High Court clarified that deductions for property passing on death are only provided under section 44 of the ED Act, 1953, and no deduction is allowed for Estate Duty payable on the deceased's estate. The Tribunal agreed with the Appellate Controller, emphasizing that no deduction is permissible for estate duty in the computation of principal value.

2. The second issue revolves around the aggregation of interest in joint family property for estate duty calculation. The appellant argued that the interest of lineal descendants should not be aggregated for determining the rate of estate duty, contending that section 34(1)(c) is ultra vires. However, the Tribunal held that it cannot question the vires of a provision and cited the decision in Hari Ram vs. Asstt. CED-cum-Income-tax Circle, Gurgaon, which negated the appellant's contention. The Tribunal clarified that the interest of lineal descendants is aggregated only for calculating the rate of estate duty, not for levying the duty itself. The Punjab High Court's decision in Hari Ram, 101 ITR 539, established that the share of lineal descendants is aggregated for rate determination, but no estate duty is levied on it. Therefore, the Tribunal rejected the appellant's argument, affirming that the interest of lineal descendants is considered solely for determining the rate of estate duty on the property passing on the deceased's death.

In conclusion, the appeal was dismissed by the Tribunal based on the above analysis of the issues presented before it.