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TMI Blog1987 (6) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... eal descendants, i.e., the 5 sons of the deceased, in the said house was Rs. 50,000. The Assistant Controller of Estate Duty held that no estate duty is payable on Rs. 10,000 which was the value of the share of the deceased in the house in question as the same was exempt under section 33(1)(n) of the Act. According to him, no duty was leviable on Rs. 50,000 which was the value of the share of the lineal descendants in the house but under section 34(1)(c) for ascertaining the rate of estate duty payable on the estate of the deceased passing on his death, the value of the share of the lineal descendants in the house, i.e., a sum of Rs. 50,000, was liable to be aggregated. The matter thereafter was taken in appeal by the accountable person to the Appellate Controller who reversed the order of the Assistant Controller on this account and held that the value of the share of the lineal descendants will not be included for aggregating the same with the estate of the deceased under section 34(1)(c) of the Act for calculating the rate of estate duty. The Revenue then took up the matter in further appeal before the Tribunal which upheld the decision of the Appellate Controller on the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he aggregated Rs. 19,500 being the value of the half share of the lineal descendants in the residential house. The matter was taken in appeal. The Appellate Controller held that Rs. 39,000 which was the value of the entire residential house was liable to be exempted under section 33(1)(n) of the Act and since the value of the entire house was exempt, Rs. 19,500 being the value of the lineal descendants' share in the said house could not have been aggregated for calculating the rate of estate duty under section 34(1)(c) of the Act. The Tribunal upheld the order of the Appellate Controller. When the matter was taken in reference before the Madras High Court, their Lordships approved the view of the Tribunal. It was held that section 39(3) of the Act provides that if the deceased was member of a joint family, the principal value of the property as a whole should be determined on the assumption that the entire joint family properties belonged to the deceased and at the stage of determination of the principal value of the properties of the family as a whole, treating the same as belonging to the deceased, the provisions of exemption contained in section 33(1)(n) of the Act should be gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the date of death of the deceased will be half of four lakhs of rupees, that is, two lakhs of rupees and if exemption is to be given under section 33(1)(n) to the deceased's half share alone in the residential house, the principal value of his share in the joint family will come to two lakhs of rupees minus seventy-five thousand rupees, that is, Rs. 1,25,000, while the lineal descendant's share will be Rs. 2,00,000, because he will not be entitled to exemption under section 33(1)(n) as his share did not pass on the death of the deceased. Thus, for rate purposes, the principal value of the deceased's share comes to Rs. 1,25,000 and that of the lineal descendant comes to Rs. 2,00,000. This inequality will not arise, if, as already stated, section 39(3) is properly given effect to, that is the exemption under section 33(1)(n) is given at the stage of determination of the principal value of the properties of the joint family in entirety and then apportioning the shares of all the coparceners including that of the lineal descendants. " According to the example given and the principle decided by their Lordships, more estate duty was leviable on the estate of the deceased in that case. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deceased within the meaning of section 33(1)(n) of the Act is only share of the deceased in the joint family residential house. Therefore, the principal value of the share of the deceased only in the joint family residential house can be exempted from payment of the estate duty under section 33(1)(n) of the Act and the principal value of the entire joint family residential house will not be liable to be exempted. Under section 34(1)(c), the value of the share of the lineal descendants in the house shall be aggregated only for calculating the rate of estate duty on the value of the share of the deceased therein though no estate duty is leviable on the value of the share of the lineal descendants in the house. In case it is held that the principal value of the entire joint family residential house is to be taken into consideration for granting exemption under section 33(1)(n) of the Act and the exemption will be granted thereon and thereafter only the estate duty will be payable on the share of the deceased, it would mean that higher amount of estate duty shall be payable on the estate of the deceased which passes on his death. This would go contrary to the spirit of the legislati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 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)(c) without any reference to any exemption under section 33(1)(n) of the Act. " The Madhya Pradesh High Court in CED v. R. S. Gwalre [1981] 130 ITR 261, the Allahabad High Court in ITAT v. Madan Mohan [1979] 119 ITR 781 and in CED v. Satish Chandra [1979] 119 ITR 783 and the Gujarat High Court in Gunvantlal Keshavlal v. CED [1982] 134 ITR 533 have taken the view in line with the Karnataka High Court. Thus, I hold that the Assistant Controller has rightly exempted only the value of the share of the deceased in the joint family residential house and aggregated the value of the share of the lineal descendants in the residential house for calculating the rate of estate duty. In my view, neither the Appellate Controller nor the Tribunal was justified in taking the contrary view. Learned counsel for the accountable person further contended tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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