RAMESHWAR LALL AGARWAL Vs. UNION OF INDIA

JUDGEMENT

(1.) THIS is an application under Articles 226 and 227 of the Constitution of India. The petitioner prays for an appropriate writ for quashing the order passed by the Appellate Controller of Estate Duty, Ranchi Range, Ranchi (annex. 3), dated 18th December, 1974, and for a declaration that Section 34(1)(c) of the E.D. Act is unconstitutional.

(2.) THE petitioner's father, Tejmal Agarwal, died on 7th December, 1969, leaving behind movable and immovable properties and was governed by the Mitakshara school of Hindu law. Evidently, the share of the deceased in the movable as well as the immovable properties in the estate, would be half. THE petitioner being an accountable person within the meaning of the E.D. Act (hereinafter referred to as "the Act") filed a return declaring the principal value of the share of the deceased in the joint family properties at Rs. 60,208. Respondent No. 3, namely, the Asst. Controller of Estate Duty, Ranchi, by his order dated September 4, 1973 (annex. "1"), determined the value of the properties passing on the death of the deceased at Rs. 1,01,359. He also added an equal sum and further a sum of Rs. 31,336 being the share of the petitioner as the lineal descendant of the deceased, in accordance with the provisions of Section 34(1)(c) of the Act. Thus, the principal value of the estate was determined at Rs. 2,34,054 in accordance with the provisions of Section 34(1)(c) of the Act.

(3.) MR. Rajgarhia, appearing for the revenue, on the other hand, contended that although the above provision, on the face of it, does give such an impression, in a sense, the aggregation of the interests of the members of the joint family, in the family property is made only for rate purposes, inasmuch as the subsequent provisions of Section 34 itself excludes the interests of these members, the net result of the aggregation is that the property passing to the hands of the lineal descendants on the death of a Hindu attracted only the incidence of a higher rate of duty. The reason for the Madras High Court in holding that the provision contained in Section 34(1)(c) is illegal, is that the said provision virtually brings in property belonging to the lineal descendants to charge along with the interest of the deceased passing on death when there was no such provision in the Act which could enable the levy of charge on any property not passing on the death of the deceased. It was further observed that under the Mitakshara system of Hindu law, the deceased did not have any right or interest in the share of the lineal descendants in the joint family property which they acquired as a result of their right by birth and, therefore, that interest could not be brought under the charging section by the process of aggregation said to be for rate purposes.