JACOB CHERIAN Vs. CONTROLLER OF ESTATE DUTY

JUDGEMENT

(1.) IN this reference, the INcome-tax Appellate Tribunal, Cochin Bench, Ernakulam, at the instance of the accountable person, has referred the following two questions for decision by this court ;

(2.) THESE proceedings relate to the estate of the late Mrs. Annamma Chacko, who passed away on June 25, 1980. The accountable person is her grandson. In connection with the estate duty assessment, the accountable person filed an estate duty account declaring the principal value of the estate at Rs. 2,90,383. In the assessment, the accountable person claimed before the authority that in computing the principal value of the estate of the deceased, deduction should be given for the provision for gratuity. The assessing authority rejected the said claim. Likewise, the assessing authority also included a sum of Rs. 6,00,000 in determining the principal value of the estate of the deceased being the estimated amounts representing the coffee pool payments. Annexure-"B" to the assessment order shows that a sum of Rs. 4,25,000 is shown as provision for gratuity of the Padinjarekara Estates Ltd. The assessing authority completed the assessment by order dated May 2, 1983, determining the principal value of the estate of the deceased at Rs. 15,56,889.

(3.) BEING aggrieved by the order of the Appellate Controller of Estate Duty, Madras, the Department filed an appeal before the Income-tax Appellate Tribunal, Cochin Bench, Ernakulam. Regarding determination of the market value of shares of Padinjarekara Estates Ltd., the Income-tax Appellate Tribunal held that Rule 1D of the Wealth-tax Rules has to be applied. The Appellate Tribunal then considered the question regarding the deduction of the provision for gratuity liability while determining the market value of unquoted equity shares of Padinjarekara Estates Ltd. The Appellate Tribunal observed that this question has come up for consideration before the same Bench in E. D. A. No. 15/(Coch) of 1985, dated August 29, 1989, wherein the Appellate Tribunal held that the Appellate Controller of Estate Duty is not justified in holding that the provision for gratuity is an allowable deduction while computing the principal value of the estate of the deceased. Following the said decision, the Appellate Tribunal set aside the order of the Appellate Controller on this point and restored the order of the Assistant Controller of Estate Duty.