Estate Duty Act-Exemption u/s 33(1)(n) in respect of a house owned by a firm. - Income Tax - 1666/CBDT

INSTRUCTION NO. 1666/CBDT Dated: Dated: Decemebr 10, 1985 The Board had earlier issued Circular NO. 330 dated 27th March, 1982 from file F. No 309/29/80-ED on the question as to whether exemption u/s 33(1)(n) of the Estate Duty Act, 1953 was available in respect of a house owned by a firm in which the deceased was a partner (if the deceased was residing in the house at the time of his death). It was stated in the above circular that a firm has no legal existence and the partnership property vests in all the partners and every partner has an interest in the property of the partnership. Since u/s 33(1)(n) property belonging to the deceased will qualify for exemption and since the expression 'belong' would include cases where an interest less than full ownership exists, exemption u/s 33(1)(n) would be admissible in respect of a house belonging to the firm. 2. At the instance of the Comptroller and Auditor General of India, New Delhi the matter has been re-examined and it has now been decided that since the partner has no interest in a specific item of immovable property of the firm, the house which is an asset of the firm cannot be exempted under section 33(1)(n) of the Estate Duty Act, even if the expression "belonging to" in section 33(1) read with section 2(15) of the Estate Duty Act is interpreted as possession of interest less than that of ownership. 3. In the circumstances stated above Board's earlier Circular No. 330, dated 27 March, 1985 is hereby withdrawn. 4. The contents of this Instruction may be brought to the notice of the officers working in your charge.