SARDARNI VIRPAUL KAUR Vs. CONTROLLER OF ESTATE DUTY

JUDGEMENT

(1.) THE following question of law has been referred to us for opinion under Section 64 (1) of the Estate Duty Act, 1953, hereinafter called the Act :

(2.) IT has arisen in the following circumstances. Col. Raghbir Singh died on 7th January, 1953, leaving property, both agricultural and non-agricultural. On his death, his widow, Shrimathi Virpaul Kaur, furnished an account of that property to the Assistant Controller of Estate Duty, Patiala. The agricultural property was situated in the former State of Pepsu and the same was exempt from estate duty at the time of the death of the deceased. The Deputy Controller of Estate Duty, who completed the assessment, determined the net principal value of the estate of the deceased at Rs. 10,63,217 and this amount included the value of the agricultural lands, which was Rs. 9,44,060. The assessee filed an appeal before the Central Board of Revenue and objected to the valuation of the property made by the Deputy Controller. It was also said that the value of the non-agricultural property did not exceed rupees one lakh and, therefore, no duty was leviable thereon. The Board remanded the case to the Deputy Controller for making further enquiries regarding the disputed question of valuation of the various properties. After the report was received, the Board allowed some reductions in respect of the valuation made by the Deputy Controller, with the result that the principal value of the estate of the deceased was reduced to Rs. 9,79,486 and the value of the agricultural lands comprised therein was reduced to Rs. 8,73,820. The Board overruled the other contention of the assessee to the effect that no duty was leviable under Section 35 read with the Second Schedule to the Act, because the estate of the deceased consisted of two types of properties, one on which estate duty was leviable and the other, namely, agricultural land, which was exempt from the payment of the estate duty and the value of the former was less than rupees one lakh. It held that under Section 34 (1) of the Act, all properties passing on death, including exempted agricultural lands in the Pepsu State, had to be aggregated in the first place for determining the principal value of the estate and the rate of duty appropriate thereto. When that was done, the principal value exceeded rupees one lakh and there was, therefore, a definite rate of duty applicable to the estate of the deceased. The duty was, however, to be levied on the dutiable portion of the estate, the rest being exempt, but at the rate applicable to the aggregate estate.

(3.) THE charging section in the Act is Section 5, the relevant portion of which reads :