1979 (8) TMI 124 - AT - Income Tax

2008 (2) TMI 479 - AT

Issues Involved:
1. Valuation of cash in hand.
2. Valuation of the deceased's share in the goodwill of the firm.
3. Valuation of agricultural land.
4. Valuation of the residential house.
5. Addition under Section 34(1)(c) read with Section 33(1)(n) of the Estate Duty Act, 1953.

Issue-wise Detailed Analysis:

1. Valuation of Cash in Hand:
Shri Brajnandan Prasad died on 28th March 1977. The accountable person claimed the deceased had no cash in hand. However, the Assistant Controller of Estate Duty (Asstt. CED) estimated the cash in hand at Rs. 1,000, a finding confirmed by the Appellate Controller of Estate Duty (Appl. CED). Since there was no satisfactory material on record to prove the deceased had Rs. 1,000 in cash at the time of death, the Tribunal found the authorities' estimation baseless and deleted the addition of Rs. 1,000.

2. Valuation of the Deceased's Share in the Goodwill of the Firm:
The Asstt. CED assessed the value of the deceased's share in the goodwill of the firm M/s. Brajnandan Prasad & Sons at Rs. 16,990. The Appl. CED adjusted the remuneration for partners from Rs. 5,000 to Rs. 6,000 per annum, reducing the share value to Rs. 12,990. The Tribunal partly accepted the accountable person's plea, finding the 13% expected return on capital reasonable but increasing the partners' remuneration to Rs. 7,000 per annum. The deceased's 1/7th share in the goodwill was thus valued at Rs. 9,000, modifying the impugned order accordingly.

3. Valuation of Agricultural Land:
The HUF of late Shri Brajnandan Prasad owned 13.3 acres of agricultural land. The accountable person declared the land's value at Rs. 30,000 based on a valuer's report. The Asstt. CED estimated the value at Rs. 45,320, a valuation upheld by the Appl. CED. The Tribunal, noting no serious flaws in the valuer's report and acknowledging the land's location in a flood zone, accepted the valuer's assessment, setting the land's value at Rs. 30,000.

4. Valuation of the Residential House:
The HUF owned a residential house valued by the valuer at Rs. 2,23,263, with 50% depreciation allowed, amounting to Rs. 1,11,632. The Asstt. CED, considering the building's 20-year age and a total life of 60 years, allowed 33 1/3% depreciation, valuing the house at Rs. 1,48,860, a valuation upheld by the Appl. CED. The Tribunal, referring to the Indian Value journal, found it fair to allow 40% depreciation and directed the Asstt. CED to work out the property's value accordingly.

5. Addition Under Section 34(1)(c) read with Section 33(1)(n):
The Asstt. CED valued the residential house at Rs. 2,05,957 post-depreciation, granting Rs. 25,725 exemption for the deceased's 1/8th share under Section 33(1)(n) and adding Rs. 1,54,468 for the value of six lineal descendants' shares for rate purposes under Section 34(1). The accountable person objected to aggregating the lineal descendants' shares, a plea rejected by the Appl. CED. The Tribunal, interpreting Section 39(3), held that the exemption under Section 33(1)(n) was only applicable to the deceased's share in the joint family residential house, not the entire house. This view was supported by commentaries and the Madras High Court decision in CED, Madras vs. Estate of late R. Krishnamachari, which clarified that the exemption under Section 33(1)(n) is limited to the value of the deceased's share in the property. The Tribunal rejected the accountable person's plea for full exemption of Rs. 1 lakh under Section 33(1)(n).

Conclusion:
The appeal was partly allowed, with modifications to the valuations of cash in hand, the deceased's share in goodwill, agricultural land, and the residential house. The Tribunal upheld the limited exemption under Section 33(1)(n) for the deceased's share in the residential house.

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