SUMATILAL CHIMANLAL SHAH Vs. CONTROLLER OF ESTATE DUTY

JUDGEMENT

(1.) AT the instance of the accountable person for the estate of the deceased, one Maniben Shivlal, the following three questions have been referred to us under S. 64(1) of the ED Act, 1953:

(2.) THESE questions arise on the facts and in the circumstances narrated hereinbelow The said Maniben died on 12th Jan., 1962, leaving a will dt. 20th Feb., 1936, and a codicil dt. 1st Jan., 1962 . The accountable person the applicant herein submitted; the estate duty account on 12th July, 1962. In the said account, the accountable person valued plots of land belonging to the deceased bearing S. Nos. 600 and 601 within the revenue limits of village Wadaj, within the City of Ahmedabad, admeasuring about 12,614 sq. yards at Rs. 2,00,000 as on the relevant date of the death of the deceased, that is, 12th Jan., 1962. It appears that the deceased had entered into an agreement on 7th Dec., 1959, for sale of the said land with Satyavadi Co operative Housing Society Ltd. to sell the said plot for Rs. 3,56,708 at the rate of Rs. 22 per sq. yard. According to the said agreement, the deceased vendor agreed to convey the said property within four years from the date of the, agreement and further agreed to hand over the possession immediately in consideration of which the vendee agreed to pay rent at the rate of Rs. 16,855 per annum till the conveyance was executed. It appears further that on 21st Dec., 1959, the Government of the erstwhile State of Bombay issued a notification under S. 4 of the Land Acquisition Act 1984, declaring that the said land was likely to be needed for the public purpose of construction of houses of Haridwar Co operative Housing Society Ltd. Subsequently, however, the said notification was cancelled by the Govt. of Gujarat by its notification of 17th Feb., 1962, which is admittedly after the death of the deceased. The said land was, therefore, sold to Satyavadi Co operative Housing Society Ltd. for Rs. 3,56,708 pursuant to the aforesaid agreement and the vendors paid a brokerage of Rs. 32,406 for the said transaction. A question arose as to what should be the value of the land in the course of assessment for the purposes of estate duty and the accountable person claimed that the value should be fixed on the basis of the prices prevailing on 1st Jan., 1948, in view of the Land Acquisition, (Bombay Amendment) Act, 1948, and not the price for which the land Was agreed to be sold to Satyavadi Co operative Housing Society Ltd., that is, Rs. 56,708. The Asstt. CED, however, did not find any substance in this contention since the said Bombay Amendment Act of 1948 was declared to be still born and, therefore, void abinitio by the Supreme Court in N. B. Jeejeebhoy vs. Asstt. Collector, AIR 1965 SC 1096. In that view of the matter, the Asst. Controller estimated the value of the said land at the price at which, it was agreed to be sold, that is, Rs. 3,56,708.

(3.) THE accountable person, therefore, carried the matter in appeal before the Tribunal. The Tribunal was of the opinion that the valuation of the land sought to be acquired under the Land Acquisition Act, 1894, could not be assessed as on 1st Jan., 1948, as prescribed under the Bombay Amendment Act inasmuch as the said Act was declared to be void from its inception since the legislature had no competence to enact such a statute. The Tribunal further held that the principal value of any property is to be estimated at the price which it would fetch "if sold in the open market" at the time of the deceased's death as prescribed under S. 36 of the ED Act. This method of estimating the principal value does not postulate that there should be an actual sale in the open market. What is envisaged under the said S. 36 is that there is an open market and the property could be sold in such market. The Tribunal found as a common ground that if the land was not under acquisition, and if the Bombay Amendment Act was not operative, the land in question would have certainly fetched the price of Rs. 3,56,708 and the fact that it was in fact sold for that amount to Satyavadi Co operative Housing Society Ltd., after the cancellation of the notification under S. 4 of the Land Acquisition Act, could not be overlooked. The Tribunal, therefore, confirmed the finding of the authorities as regards the principal value of the property in question. As regards the question of brokerage, the Tribunal disallowed the claim following the decision in Pandit Lakshmi Kant Jha vs. CWT 1973 CTR (SC) 260 : (1973) 90 ITR 97 (SC). It is in these circumstances that the accountable person prayed for a reference of the questions set out hereinabove for our opinion.