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TMI Blog1995 (1) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... 1)(n) as its value was below Rs. 1,00,000. According to the Assistant Controller of Estate Duty, the value of the house property was assessed at a figure of Rs. 65,000. The house property was assessed in land and building tax as on March 1, 1973, at a figure of Rs. 56,500. Therefore, in order to estimate the value as on April 1, 1973, the Assistant Controller considered it at a figure of Rs. 1,00,000 and the 1/5th share of the deceased therein was exempted and the 3/5ths share of the three legal representatives was held liable to be included in the estate for rate purposes. In appeal, the Appellate Controller of Estate Duty following the decision in CED v. Estate of Late Durga Prasad Beharilal [1979] 116 ITR 692 (AP), the said amount was directed to be excluded from the principal value of the estate. The Income-tax Appellate Tribunal asked a question from the Departmental Representative as to whether the deceased alone was residing in the house in dispute or the lineal descendants were also residing therein. Since he was not in a position to correctly state the facts, therefore, the Appellate Tribunal came to the conclusion that the deceased was occupying the house exclusively bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] 91 ITR 24, has upheld the aggregation and constitutionality of the provisions of section 34(1)(c) as under : " Section 34(1)(c) only provides for the rate of estate duty to be levied upon such benefit. For determining that rate the interests of all the lineal descendants of the deceased in the joint Hindu family property are to be aggregated so as to form one estate and estate duty is to be levied at the rate applicable to the principal value thereof. Sub-section (2) of section 34 is put somewhat clumsily. It uses the expression 'property exempt from duty' and its Explanation defines the expression to include the interests of all coparceners other than the deceased in the joint family property. Where, therefore, the estate referred to in clause (c) of sub-section (1) of section 34 includes the interests of coparceners, other than the deceased, which is the property exempt from estate duty, the estate duty leviable on the property not exempt, i.e., on the interest of the deceased, shall be calculated by application of this formula. What is the proportion of the value of the property not exempt to the value of the estate : that proportion of the amount payable on the estate is pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y) the same is liable to be included in accordance with the provisions of section 34(1)(c). Provisions for valuation of interest in coparcenary property ceasing on the death has been provided under section 39(1) of the Act. For the purpose of determining the value of the share of a member of the joint Hindu family and for the purpose of determining the estate duty on his estate after his death and the total value of the property valuing each of them separately has to be determined in accordance with this provision. The question of exemption, if any, then has to be examined in accordance with the provisions contained in section 33(1)(n). The balance of the estate thereafter has to be aggregated in accordance with the provisions of section 34(1)(c). On this principle of law, it has to be seen that the exemption which has been provided under section 33(1)(n) is in respect of the house or a part thereof which is exclusively used by the deceased for his residence. The provisions of sub-section (1)(c) of section 34 have to be interpreted in the manner that exemption contemplated by section 33(1)(n) in respect of those assets which belong to the deceased and pass on his death, alone are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e opinion that the words "which passes on his death" cannot be isolated from the provisions of section 33(1)(n) and in the case of a residential house belonging to the Hindu undivided family it is the share of the deceased which passes on his death. The value of such share alone in the residential house will be exempt from payment of estate duty under clause (n). The Karnataka High Court in the case of CED v. N. Ramachandra Bhat [1980] 123 ITR 841, while interpreting the provisions of section 33(1)(n) of the Act observed that in a residential house belonging to a Hindu undivided family governed by the Mitakshara law only the share of the deceased in the house is exempted from estate duty under section 33(1)(n). For the purposes of rate of estate duty, the value of the share of the deceased in such house has to be excluded from the value of the property passing on his death under section 34(1)(a) but the value of the shares of all the lineal descendants of the deceased in the coparcenary property including the residential house has to be aggregated under section 34(1)(a) without any reference to any exemption under section 33(1)(n). In the case of Smt. Gunvantibai v. CED [1981] 130 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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