9911796707
TMI Blog1997 (9) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... e duty payable on the taxable estate ?" Barkat Ram Khanna died in July, 1976. In response to a notice issued under s. 58(2) of the ED Act, 1952 (hereinafter referred to as 'the Act'), his son Kismat Rai Khanna, being the accountable person, filed the ED return showing the principal value of the estate at Rs. 1,39,198. An HUF of Barkat Ram Khanna owned half share in the self-occupied residential property. The other half belonged to Piare Lal, brother of Barkat Ram Khanna. The value of such house was shown at Rs. 35,153. Accountable person's case before the Asstt. CED was that since the value of the residential house was below Rs. 1 lac, it was totally exempt from the payment of estate duty and no part of it could be aggregated with the ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion purposes under. 34 of the Act. Tribunal noticed the difference of opinion between the Karnataka High Court in CED vs. K. Nataraja [1979] 8 CTR (Kar) 32 : [1979] 119 ITR 769 (Kar), and the Andhra Pradesh High Court in CED vs. Estate of Late Durga Prasad Beharilal [1979] 116 ITR 692 (AP), and adopted the view taken by the Andhra Pradesh High Court in Estate of Late Durga Prasad Beharilal's case , which was in favour of the assessee. On a petition filed under s. 64(1) of the Act, the question of law reproduced in the earlier part of the judgment, has been referred to this Court, for its opinion. Secs. 33(1)(n) and 34(1) of the Act, which are the relevant provisions of the Statute, are reproduced below : "Sec. 33(1) Exemptions.-(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d had only 1/5th share in the undivided residential house which was exempt under s. 33(1)(n) and value of the balance 4/5ths share of the house property cannot be taken into consideration for the purpose of determination of the net principal value of the estate of the deceased inasmuch the said 4/5ths share belonged to other coparceners. Therefore, the value of the entire house is liable to be excluded from the net principal value of the estate." The same view was taken by the Andhra Pradesh High Court in K. Venugopal vs. CED [1983] 36 CTR (AP) (FB) 334 : [1983] 143 ITR 988 (AP) (FB). Madras High Court in CED vs. D. Rajasekaran Kamak [1983] 36 CTR (Mad) 12 : [1984] 147 ITR 769 (Mad), also took the same view. As against this, the Ka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal descendants of the deceased in the coparcenary property including the residential house has to be aggregated under s. 34(1)(c) without any reference to any exemption under s. 33(1)(n) of the Act. Allahabad High Court in Madan Mohan's case has also taken the same view. Madhya Pradesh High Court in R.S. Gwalre's case has also taken the same view. G.P. Singh, C.J. (as his Lordship then was), speaking for the Bench dealt with the point in issue exhaustively and held : "A perusal of s. 33(1)(n) will go to show that the exemption under that provision is not in respect of the whole house but only to the extent it belongs to the deceased and passes on his death. It is true that cl. (n) refers to "one house or part thereof" but the open ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... family property which would have been allotted to the deceased had there been a immediately before his death. Sec. 39(3), on which great reliance has been placed by the accountable person, provides that for the purpose of estimating the principal value of the joint family property of a Hindu family governed by the mitakshara law in or to arrive at the share which would have been allowed to the deceased had a partition taken place immediately before his death, the provisions of the Act, so far as may be, shall apply as they would have applied if the whole of the joint family property had belonged to the deceased. Now, s. 39(3) creates a fiction for the purpose of estimating the principal value of the joint family property of a Hindu family. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e residential house of the family has to be allowed under s. 33(1)(n). Thereafter, the value of the interest in the joint family property of all the lineal descendants of the deceased is to be added to the principal value of the interest of the deceased minus the exemption allowed to him under s. 33 (1)(n). It is on this aggregate amount that the rate of estate duty is to be applied subject to this that the inclusion of the value of the interest of the lineal descendants in the joint family property is merely for rate purposes as is clear from s. 34(2). In our opinion, the Tribunal was wrong in applying the fiction contained in s. 39(3) to extend the exemption under s. 33(1)(n) so as to cover the value of the interest of the lineal descenda ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
