CONTROLLER OF ESTATE DUTY Vs. M NALINI RAO

JUDGEMENT

(1.) This is a reference under Section 57 of the Estate Duty Act. The question of law referred for our opinion reads:

(2.) The undisputed facts of the case are these: One M. Nagendra Rao died on 10-8-1974. M. Nalini Rao his wife was the accountable person. She rendered account relating to the estate of late M. Nagendra Rao. The deceased had two sons. The eldest son had predeceased Nagendra Rao and his 1/3rd interest in the HUF had devolved on the mother Nalini Rao the accountable person under the provisions of the Hindu Succession Act, 1956. As a result only half of the 2/3rd share interest of Nalini Rao in the joint family property passed on to the accountable person on the death of Nalini Rao. The total asset of Nalini Rao as found by the Assistant Controller of Estate Duty in his order are:

(3.) As according to the charging Section 5 read with Section 35(1) of the Act read with Second Schedule, estate duty was leviable on the principal value of Rs. 1,42,236/- which passed on to the accountable person on the death of Nagendra Rao. The Assistant Controller of Estate Duty proceeded to compute the tax payable. He, however, had to include the share of the lineal descent for determining the rate of tax as provided under Section 34 of the Act. Accordingly he added l/3rd interest of the lineal descendants for rate purpose which was Rs. 1,55,736/-. By adding the said amount to the total asset with reference to which rate of tax payable had to be included came to Rs. 2,97,972/-. The Assistant Controller proceeded to compute the tax payable as follows: