CONTROLLER OF ESTATE DUTY Vs. KISMAT RAI KHANNA

JUDGEMENT

(1.) THE following question of law has been referred to this court by the Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh, for its opinion :

(2.) BARKAT Ram Khanna died in July, 1976. In response to a notice issued under Section 58 (2) of the Estate Duty Act, 1953 (hereinafter referred to as "the Act"), his son, Kismat Rai Khanna, being the accountable person, filed the estate duty return showing the principal value of the estate at Rs. 1,39,198. A Hindu undivided family of Barkat Ram Khanna owned half share in the self-occupied residential property. The other half belonged to Piare Lal, brother of Barkat Ram Khanna. The value of such house was shown at Rs, 35,153. The accountable person's case before the Assistant Controller of Estate Duty was that since the value of the residential house was below Rs. 1 lakh, it was totally exempt from the payment of estate duty and no part of it could be aggregated with the taxable estate. The Assistant Controller, however, determined the half share of the deceased in the HUF at Rs. 55,250 instead of Rs. 35,153, which had been shown in the return. The Assistant Controller allowed exemption under Section 33 (1) (n) of the Act in respect of the half share representing the deceased's share in the HUF and added the half share, i. e. , Rs. 27,625, of the lineal descendants under Section 34 (1) (c) of the Act for aggregation purposes.

(3.) THE Revenue filed an appeal before the Tribunal but the same was dismissed. It was held by the Tribunal that if an exemption is available to the Hindu joint family in respect of a residential house, its value being less than Rs. 1 lakh, no valuation in respect of the same could be brought in the estate either for the purposes of tax or aggregation. The accountable person contested the valuation adopted but the Tribunal did not consider it necessary to go into that aspect because of its decision on the legal issue which resulted in deletion of the addition of Rs. 27,625 made for aggregation purposes under Section 34 of the Act. The Tribunal noticed the difference of opinion between the Karnataka High Court in CED v. K. Nataraja [1979] 119 ITR 769 and the Andhra Pradesh High Court in CED v. Estate of Late Durga Prasad Beharilal [1979] 116 ITR 692 and adopted the view taken by the Andhra Pradesh High Court in Estate of Late Durga Prasad Beharilal's case [1979] 116 ITR 692, which was in favour of the assessee.