Controller of Estate Duty vs S.S. Mehta

The Income Tax Appellate Tribunal has referred the following question of law arising out of its order dated February 10, 1983 :

" Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the share of lineal descendants in the self-occupied property was liable to be excluded from the principal estate of the assessee for rate purposes u/s 34(1)(c) of the Estate Duty Act, 1953 ? "

The brief facts of the case are that the deceased had a one-fifth share in the immovable property belonging to the Hindu undivided family of which he was karta. He was survived by his wife and three sons. All the sons stayed outside in connection with either employment or profession. The value of the house, after adjustment of the loan, was taken at Rs. 1,60,000. The property was partly self-occupied and partly let out. The share of the lineal descendants was taken at Rs. 60,000 in the let out portion and at Rs. 36,000 in the self-occupied portion and both the amounts were included for rate purposes in view of Section 34(1)(c) of the Estate Duty Act. On appeal, the Appellate Controller of Estate Duty excluded the sum of Rs. 36,000 representing the share of the lineal descendants in the self-occupied portion, following the decision of the Andhra Pradesh High Court in the case of Controller of Estate Duty Vs. Estate of Late Durga Prasad Beharilal (by accountable person and Others), The order of the Appellate Controller of Estate Duty was accepted by the Tribunal and it was observed that the self-occupied portion which was used by the deceased was exempt. Except the deceased and his family, no stranger lived in the self-occupied portion. The part of the house which exclusively remained in the occupation of the deceased, therefore, was fully exempt u/s 33(1)(n) and Clause (c) has no application to such portion.

This matter was considered by this court in the case of CED v. Nirmala Saxena [1995] 214 ITR 566 (D. B. Estate Duty Reference No. 112 of 1983 decided on January 4, 1995). It was observed by this court as under (at page 572) :

" In view of the various decisions referred to above and on the basis of the language used in Section 33(1)(n), we are of the opinion that the exemption is available only in respect of the property which belongs to the deceased and which passes on his death. The Hindu undivided family property in which the lineal descendants have any interest cannot be said to be entirely belonging to the deceased, it is only the share of the deceased to the extent which passes on his death which is exempt. It is his share alone which passes on his death and, therefore, the exemption contemplated in Section 33(1)(n) is restricted to the share of the deceased. u/s 34(1)(c), the value of the share of the lineal descendants of the deceased in the coparcenary property has to be aggregated with the principal value of the estate of the deceased for the purposes of rate of duty.

In view of the specific language of Clause (c) of Section 34(1) the validity of which has already been upheld by the apex court, the interest of the lineal descendants is liable to be included and, therefore, we are of the view that the Income Tax Appellate Tribunal was not justified in holding that the share of lineal descendants in coparcenary property was not includible in the principal estate of the deceased for rate purposes u/s 34(1)(c). "

Following the above decision, we are of the opinion that the Tribunal was not justified in holding that the share of the deceased (?) in the self-occupied portion was liable to be excluded for rate purposes u/s 34(1)(c) of the Estate Duty Act.

Accordingly, the reference is answered in favour of the Revenue and against the assessee. No order as to costs.