1985 (7) TMI 138 - AT - Income Tax

Issues Involved:
1. Applicability of Rule 1BB of the Wealth-tax Rules, 1957 for valuation of the self-occupied flat.
2. Deductibility of estate duty payable.
3. Inclusion of premiums paid on life insurance policies of minor children as gifts.
4. Inclusion of renewal commission as property passing on death.

Issue-wise Detailed Analysis:

1. Applicability of Rule 1BB of the Wealth-tax Rules, 1957 for valuation of the self-occupied flat:
The accountable person contended that the valuation of the self-occupied flat should be done under Rule 1BB of the Wealth-tax Rules, 1957. The department objected, arguing that this plea was not raised before the lower authorities. However, the Tribunal rejected this preliminary objection, stating that the question of valuation was under consideration at each stage and could be raised before the Tribunal. The Tribunal emphasized that for consistency, the same property should not be valued differently under different Acts. Hence, it directed the Assistant Controller to apply Rule 1BB for valuation.

2. Deductibility of estate duty payable:
The accountable person argued that the estate duty payable should be an admissible deduction. This plea was rejected based on the precedent set in Smt. V. Pramila v. CED [1975] 99 ITR 221 (Kar.), which held that such a deduction was not permissible.

3. Inclusion of premiums paid on life insurance policies of minor children as gifts:
The Assistant Controller included Rs. 10,789, the premiums paid on life insurance policies for minor children, as gifts under section 9(1) read with section 27 of the Estate Duty Act, 1953. The Controller (Appeals) deleted this amount, reasoning that the payments were made to LIC, not as gifts to the children. The Tribunal modified this decision, holding that Rs. 789 should be included as it exceeded the normal expenditure limit of Rs. 10,000 under section 9(2)(b). The Tribunal left open the broader question of whether such premiums constituted gifts.

4. Inclusion of renewal commission as property passing on death:
The Assistant Controller included Rs. 63,257.35, the estimated future renewal commission, as property passing on death. The Controller (Appeals) deleted this amount, considering it a contingent interest. The Tribunal disagreed, noting that the deceased had a beneficial interest in the renewal commission, which constituted property passing on death. However, it directed the Assistant Controller to verify whether the amount represented an actuarial valuation and to allow the accountable person to submit necessary material for accurate valuation.

Conclusion:
Both appeals were partly allowed. The Tribunal directed the valuation of the self-occupied flat under Rule 1BB, rejected the plea for estate duty deduction, modified the inclusion of life insurance premiums to Rs. 789, and remanded the issue of renewal commission valuation for further verification.

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