1986 (12) TMI 67 - AT - Income Tax

Summary

Issues:
1. Whether the Appellate CED erred in deleting the addition of Rs. 14,400 made by the Assistant CED on account of half share of the lineal descendant under the head of one residential house.
2. Whether the Appellate Controller erred in deleting the addition of Rs. 94,336 made by the Assistant Controller for rate purposes on account of the share of the lineal descendant in the ancestral property.

Analysis:

Issue 1:
The first ground of appeal in this case revolves around the interpretation of provisions under sections 33(1)(n), 34(1)(c), and 39(3) of the Estate Duty Act. The dispute arises from the exemption of the residential house belonging to the Hindu Undivided Family (HUF) of the deceased but occupied by the deceased himself. The Assistant CED included 50% of the house's value for aggregation under s. 34(1)(c), while the Appellate CED, relying on the Andhra Pradesh High Court judgment, held that the entire house's value was exempt under s. 33(1)(n). The Appellate Controller, following the Andhra Pradesh High Court decision, deleted the addition of Rs. 14,400. The Revenue contended that only the deceased's share in the coparcenary property is exempt under s. 33(1)(n) and that the share of the lineal descendant should be aggregated for rate purposes under s. 34(1)(c). However, the Appellate Tribunal upheld the Appellate Controller's decision based on the Andhra Pradesh High Court judgment, emphasizing that if the value of the house is completely exempt, no aggregation is necessary.

Issue 2:
The second ground of appeal concerns the addition of Rs. 94,336 made by the Assistant Controller for rate purposes regarding the share of the lineal descendant in the ancestral property. The Appellate Controller, influenced by the Madras High Court's decision declaring s. 34(1)(c) as violative of the Constitution, deleted the addition. The Revenue challenged this decision, arguing that the Madras High Court's ruling should not apply outside its jurisdiction. The Revenue further cited a judgment by the Punjab and Haryana High Court upholding the constitutionality of s. 34(1)(c) and requiring aggregation of the lineal descendant's share for rate purposes. The Appellate Tribunal, aligning with the Departmental Representative's arguments, reversed the Appellate Controller's decision, emphasizing that they are bound by the Punjab and Haryana High Court judgment and the rejection of a special leave petition does not confirm the lower court's decision. Consequently, the addition made by the Assistant Controller was reinstated, leading to the partial allowance of the appeal.

In conclusion, the Appellate Tribunal partially allowed the appeal, reinstating the additions made by the Assistant Controller in both disputed matters concerning the exemption of the residential house and the ancestral property share of the lineal descendant.