CONTROLLER OF ESTATE DUTY Vs. RAJASEKARAN KAMAK D

JUDGEMENT

(1.) THE following question of law has been referred to this court by the Income tax Appellate Tribunal, Madras, for its opinion at the instance of the Controller of Estate Duty, Madras :

(2.) ONE Thiru Kamak Dharmaraj Nadar died on September 19, 1970. He was the karta of the HUF consisting of himself and his only son, D. Rajasekaran Kamak. The deceased was carrying on business of purchase and sale of iron, steel, hardware, building materials, etc., as sole proprietor thereof. Besides, he was also selling the goods manufactured by certain other companies. He had executed a will be queathing all his properties to his only son, the accountable person.

(3.) AS per the above provision, for the purpose of estimating the principal value of the joint family property of a Hindu family governed by the Mitakshara, Marumakkattayam or Aliyasantana law, in order to arrive at the share which would have been allotted to the deceased had a partition taken place immediately before his death, the provisions of the Act, so far as may be, shall apply as they would have applied if the whole of the joint family property had belonged to the deceased. In this case, it is not in dispute that the Hindu joint family of which the deceased was the karta was governed by the Mitakshara law. Therefore, for the purpose of determining the value of the property that passed on the death of the deceased, we have to determine the value of the share which would have been allotted to the deceased had there been a partition in the family at the time of his death. In order to determine the value of his share, it is necessary to determine the principal value of the joint family property and therefrom deduce the value of the share of the deceased which actually passed on death. For that purpose, s. 39(3) provides that the entire joint family properties should be treated as that of the deceased. For the purpose of the determination of the principal value of the entire joint family property, we have to proceed on the basis, in view of s. 39(3), that the entire properties belonged to the deceased. Therefore, in determining the principal value of the entire properties of the joint family, the exemption provision contained in s. 33(1)(n) has to be applied. Though the residential house belonged to the joint family and was used for the residence of all the members of the joint family, for the purpose of determining the principal value of all the properties of the joint family, the house should be deemed to belong to the deceased and the exemption provision has to be applied. Section 33(1)(n) gives an exemption of Rs. 1,00,000 if the house is situate in a place where the population is more than 10,000, or of the value of the entire house in any other case. In this case, the value of the house has been found by the ASst. Controller to be Rs. 39,000. In view of s. 33(1)(n), the entire sum of Rs. 39,000, being the value of the residential house, will stand exempted and if cannot be included in the principal value of the joint family properties. Here the deceased's half share in the house has been exempted but the half share belongings to the lineal descendant has not been exempted and the accountable person is aggrieved by the inclusion of his half share in the house for rate purposes.