CONTROLLER OF ESTATE DUTY Vs. MOHD SULTAN

JUDGEMENT

(1.) :

(2.) ONE Mohd. Sultan owning about Acs. 109 of land at Premavathipet died on 16th Dec., 1964. Even during his life-time the State Government issued a notification on 7th Feb., 1964, under the Land Acquisition Act for compulsorily acquiring this land for a public purpose. The deceased claimed compensation for this land at Rs. 5 per square yard. The total compensation payable at that rate would amount to Rs. 26,62,000. The value of the land was estimated by the authorities for the purpose of acquisition at Rs. 10,000 per acre. The Asstt. CED determined the principal value of the estate at the amount claimed by the deceased as compensation for the land under the Land Acquisition Act. He also imposed penalty under s. 60(1)(c) of the ED Act for deliberate understatement of the value of the estate. The accountable person preferred an appeal before the Appellate CED. The Appellate CED held that the only right the deceased had at the time of his death was right to receive compensation and not the property acquired. During the pendency of the appeal, an award was made valuing the entire extent of land compulsorily acquired together with the trees thereon at Rs. 55,510. Since the land was in the occupation of protected tenants, the deceased was declared entitled only to 40per cent of the compensation. The rest was held payable to the protected tenants. Thus, a sum of Rs. 22,204 was awarded as compensation for the property of the deceased which was compulsorily acquired before his death. It was claimed before the Appellate CED that this sum of Rs. 22,204 should be substituted for Rs. 26,62,000 as the value of the estate of the deceased in respect of that item of property. The heirs of the deceased, however, not satisfied with the compensation awarded by the Court on reference, preferred a further appeal and that appeal was still pending when the Appellate CED disposed of the appeal preferred by the accountable person. The Appellate CED held that what is includible in the estate is only the compensation receivable by the estate for the lands already acquired by the Government, and as the matter was still pending in the appellate Court and had not become final, he directed the Asstt. CED to take the exact amount of compensation that the appellant will receive on its final determination as the principal value of the estate in place of Rs. 26,62,000. The Appellate CED accordingly allowed the appeal in part. The accountable person carried the matter in appeal before the Tribunal. The Tribunal on a consideration of the relevant authorities on the point held that "any amount reasonable therefor, or which is awarded by a competent authority cannot be regarded as anything other than the market value of the property which is the measure for the purpose of valuation of a property under s. 36 of the ED Act. It is clear law that only assets existing on the date of death and the value of these assets as on the date of death should be included in the estate passing. If any of the assets increased in value subsequent to the death or on account of efforts of the legal descendants, neither this asset nor the enhanced value could be regarded as assets passing on the death of the deceased". As the land was acquired on 15th Sept., 1964, and the deceased died on 16th Dec., 1964, the Tribunal took the market value on these two dates to be more or less the same and accordingly determined the principal value of the property at Rs. 22,204 which was the sum awarded by the acquisition authority immediately after the death of the deceased-estate holder and directed the substitution of that figure for the figure adopted by the Asstt. CED. Thus, the claim of the accountable person was accepted and the appeal was allowed in part. On these facts, at the instance of the Revenue, the question referred under s. 64(1) of the ED Act, 1953, for consideration is :

(3.) IN view of these two definitions the right to receive compensation for the property acquired during the lifetime of the deceased would be "property passing on the death" which is liable to estate duty. There is no dispute in this regard and we are not called upon to examine the same. Sec. 36 of the ED Act lays down as to how the principal value of any property shall be estimated for the purposes of the Act in the following words :