1994 (3) TMI 146 - AT - Income Tax

Summary

Issues Involved:
1. Domicile of the deceased at the time of death.
2. Valuation of the deceased's share in the property at Civil Lines, Bareilly.
3. Exemption claim under section 33(1)(n) of the Estate Duty Act.

Detailed Analysis:

1. Domicile of the Deceased:
The primary issue was whether the deceased was domiciled in India or England at the time of his death. The Assistant Controller of Estate Duty held that the deceased was domiciled in India, rejecting the claim of British domicile based on a judgment from the Chancery Division of the High Court of Justice. However, the Appellate Controller of Estate Duty set aside this finding for further inquiry. The accountable persons contended that the deceased had acquired British domicile, evidenced by his long-term residence in England, his British nationality obtained in 1950, and his taxation as a British resident. The Chancery Division of the High Court of Justice had declared that the deceased was domiciled in England at the time of his death, a judgment which was not considered by the Assistant Controller of Estate Duty. The Tribunal found that the foreign judgment was conclusive under section 13 of the Code of Civil Procedure, 1908, and should have been accepted. The Tribunal held that the deceased was domiciled in England, thus setting aside the order for further inquiry by the Assistant Controller of Estate Duty.

2. Valuation of the Deceased's Share in the Property:
The Assistant Controller of Estate Duty valued the deceased's half share in the property at Civil Lines, Bareilly, at Rs. 13,63,042 based on a Government-approved valuer's report, rejecting the compensation awarded by the Land Acquisition Officer of Rs. 12,38,397. The accountable persons argued that the compensation amount should be considered, as it was the market value determined by the Special Land Acquisition Officer. The Tribunal agreed with the accountable persons, citing the decision in Mrs. Khorshed Shapoor Chenai v. ACED, and held that the valuation should be based on the compensation awarded. The Tribunal set aside the order of the Appellate Controller of Estate Duty and directed that the value of the deceased's share be taken as Rs. 6,19,198, half of the compensation awarded.

3. Exemption Claim under Section 33(1)(n):
The Assistant Controller of Estate Duty denied the exemption claim of Rs. 1,00,000 under section 33(1)(n) of the Estate Duty Act, reasoning that the domicile of the deceased was in dispute. The Appellate Controller of Estate Duty upheld this denial. The Tribunal, however, found that the domicile issue had been resolved in favor of the deceased being domiciled in England. Despite this, the Tribunal noted that the specific requirement of the statutory provision was not met, as the house was not exclusively used by the deceased for his residence. Therefore, the Tribunal rejected the exemption claim.

Conclusion:
The Tribunal allowed the appeal partly, holding that the deceased was domiciled in England at the time of his death, and the valuation of his share in the property should be based on the compensation awarded by the Land Acquisition Officer. However, the claim for exemption under section 33(1)(n) was rejected.