SHAUKAT SHAH KHAN Vs. ASSISTANT CONTROLLER OF ESTATE DUTY
LAWS(IT)-1994-3-22
INCOME TAX APPELLATE TRIBUNAL
Decided on March 31,1994

Appellant
VERSUS
Respondents

JUDGEMENT

N.D. Raghavan, Judicial Member - (1.) THIS is an appeal of the Accountable Persons challenging the order dated 20-3-1991 of the Appellate Controller of Estate Duty, Lucknow as erroneous on facts and in law.
(2.) 1 The relevant facts of the case are briefly sketched below : (a) Shri Shaukat Shah Khan, the deceased, died on 20th January, 1975 in London. The Assistant Controller of Estate Duty held that the deceased was domiciled in India, but not a British domicile as claimed on the basis of the judgment dated 12-3-1982 of the Chancery Division of the High Court of Justice, and assessed the duty on the estate of the deceased in the foreign property. (b) In the Estate of the Indian property, he took the value of half share of the deceased in Kothi and land at 122, Civil Lines in Bareilly in the sum of Rs. 13,63,042 valued by the Government-approved valuer for the entire property by rejecting to adopt the value in its place at Rs. 12,38,397.05 being the compensation awarded by the Land Acquisition Officer for the entire property. (c) Further, the claim of exemption of Rs. 1,00,000 under Section 33(1)(ii) of the Act was also rejected for the reason that the domicile of the deceased was in dispute. 2.2 On appeal, the Appellate Controller of Estate Duty set aside the first issue to the Assistant Controller of Estate Duty to find out as to whether the deceased was a domicile of India or England at the time of his death after making independent enquiries and verification in regard to the passport of the deceased as to whether it was Indian or British. The finding of the Assistant Controller of Estate Duty on the next two issues in regard to the adoption of the Valuation of the Government-approved valuer pertaining to the Civil Lines property and in regard to the disallowance of exemption under Section 33(1)(ii) of the Estate Duty Act were confirmed by the Appellate Controller of Estate Duty. Hence the instant second appeal by the Accountable persons before us. The learned Counsel for the Accountable person prayed for allowing the appeal by submitting as below: 3.1 The deceased Shaukat Shah Khan died in London on 20-1-1975. The Assistant Controller of Estate Duty has erroneously held the deceased as domiciled in India and not treating him to be of British domicile. The deceased left India in 1975 for England where he studied at Oriel College at Oxford. In due course, he obtained a B.C.L. Degree in 1939 and M.A. in 1942. His application for British nationality was accepted and was granted on 2-10-1950. As early as 1957, he was taxed in England on the whole of his income including his Indian income as he was both domiciled and resident in England. The deceased in his letter dated 11-7-1967 to his English Accountant Price Water House & Company confirmed that he was domiciled and resident in England, living there for many years. He died on 20-1-1975 leaving his estate in India and London a complete account of which was furnished in the Estate Duty return. The Accountable persons Salim Jahan Begum, Sayeed Jahan Begum and Nadir Shah Khan, who were entitled to inherit the estate, filed the Estate duty returns separately. As these Accountable persons were not in contact with the deceased, who died intestate, they did not have knowledge of his estate in England or his civil status therein. Hence they did not know about the acquisition of British domicile by the deceased. Hence, they filed the return originally showing that the deceased was domiciled in India. Later when the Bankers and Solicitors of the deceased in England applied for Letters of Administration, the appropriate court in England, after recording evidence in regard to the affidavits filed by the Accountable Persons, found the claim of the Indian domicile of the deceased as misleading on evaluation of evidence of other independent witnesses who were friends of the deceased and attended his funeral. In the final analysis, the Chancery Division of the High Court of Justice gave its verdict to the effect that the deceased acquired domicile of England. A copy of the judgment with full narration of evidence was finished to the Assistant Controller of Estate Duty. The Accountable persons also made amendments in the return showing United Kingdom domicile of the deceased. Unfortunately the Assistant Controller of Estate Duty has not considered the said judgment on the issue of domicile, but wrongly relied on the decision in the case of Sankaran Govindan v. Laxmi AIR 1964 Ker. 244. It was held therein that the rule of res judicata applies to all adjudication in a former suit, which term denotes a suit decided prior to the suit in question whether or not it was instituted earlier thereto. The Assistant Controller of Estate Duty is wrong to say that a foreign judgment is not a judgment, especially when no reason has been assigned for such conclusion drawn by him. In view of the admissibility of the foreign judgment, it becomes conclusive. Hence the question of domicile cannot be re-examined by any other court. The Assistant Controller of Estate Duty proceeded on suspicion and surmises, not being guided by law. Further the law of domicile in Indian Succession Act, Part II, does not apply to Mohammadan as stated in Section 4 of the Indian Succession Act. Hence the findings of the Assistant Controller of Estate Duty are not correct as the deceased was domiciled in United Kingdom as per the decision of the British High Court. The Appellate Controller of Estate Duty is, therefore, totally wrong in setting aside the assessment and restoring the issue to the Assistant Controller of Estate Duty for making necessary enquiries regarding the deceased holding Indian or British passport and thereafter to decide the issue of domicile of the deceased who was held rightly to be having an English domicile of choice by the Chancery Division of the High Court of Justice at England. 3.2 The Assistant Controller of Estate Duty has also taken the value of half share of the deceased in Kothi and Land at 122, Civil Lines in Bareilly in the sum estimated at Rs. 13,63,042. The said property was acquired by the Land Acquisition Officer by paying a total compensation of Rs. 12,38,397. Half of it is the deceased's share at Rs. 6, 19, 198 which only should have been taken. The original return was filed on the basis of valuation report obtained from the approved valuer. Later on, the property was acquired under the Land Acquisition Act. Hence it was revised according to the compensation awarded by the Special Land Acquisition Officer. The Accountable Persons informed the Assistant Controller of Estate Duty that no appeal against the said award was filed. The Assistant Controller of Estate Duty cannot choose to prefer the valuation of Government Approved Valuer just because of the presence of his report valuing half share of the property of the deceased in the sum determined at Rs. 13,63,042 and of the absence of the Accountable persons to exercise their right of appeal against the award granted by the Special Land Acquisition Officer. Hence the Appellate Controller of Estate Duty erred in confirming the valuation of the half share of the deceased in the sum determined at Rs. 13,63,042 as against Rs. 6, 19, 198 being half share of compensation awarded by the Land Acquisition Officer in acquisition. The valuation made by the Valuer lost its force after the award of the Land Acquisition Officer at Rs. 12,38,307 and further adoption of it by the Departmental Valuation Officer in the case of the Accountable person Nadir Shah Khan who held 7/8th of 1 /2 share in the property. Reliance is also placed on the decision in the case of Mrs. Khorshed Shapoor Chenaiv. ACED [1980] 122 ITR 21 (SC). 3.3 Further, the Assistant Controller of Estate Duty has wrongly denied the claim of exemption of Rs. 1,00,000 under Section 33(1)(ii) of the Act for the residence of the deceased. The Assistant Controller of Estate Duty has also incorrectly upheld his reasoning that the said "claim does not qualify the requirement of section when the domicile of the deceased itself is under dispute".
(3.) ON the other hand, the learned representative for the revenue played for dismissal of the appeal by countering as below : 4.1 The Assistant Controller of Estate Duty rightly relied upon the decision in the case of Sankaran Govindan (supra). It is correctly observed by the Assistant Controller of Estate Duty that a perusal of the letter dated 18-3-1992 of the Solicitor M/s. Maxwell Batley & Co. at London stating that the deceased was domiciled in England at the time of his death shows that the issue of domicile was contested in England, and it was yet open to file appeal against it. It was proper to hold for the Assistant Controller of Estate Duty that the order of the Estate Duty authorities in England in itself was not sufficient evidence to prove that the deceased was not domiciled in India at the time of his death. His reference to Section 21(1) of the Act and to certain communication in his order rightly raises ambiguity regarding the status of the deceased. The legal position in regard to the Indian Succession Act was not properly examined by the Assistant Controller of Estate Duty, is alone the conclusion of the Appellate Controller of Estate Duty. ONly to ascertain whether any appeal was filed against the order of the British High Court and if so, to know its result as well as only to conduct an independent inquiry by verifying the passport of the deceased as to whether it was Indian or British at the time of death of deceased, the Appellate Controller of Estate Duty fairly set aside the assessment order and restored it to Assistant Controller of Estate Duty for a decision de novo on the point of domicile. 4.2 The Accountable persons themselves filed the Approved Valuer's report originally and have shown the value in the return. The compensation awarded by the Special Land Acquisition Officer cannot be held to be the market value of the property in question. The Accountable Persons had a right of appeal against the order of the Special Land Acquisition Officer which has been voluntarily forfeited by them. Hence the Assistant Controller of Estate Duty was correct to have relied upon the Approved Valuer's report. Therefore, the Appellate Controller of Estate Duty has rightly sustained the order impugned on this issue. 4.3 Further, the Assistant Controller of Estate Duty was also correct in having denied the claim of exemption of Rs. 1,00,000 under Section 33(1)(ii) of the Act. The Appellate Controller of Estate Duty was also perfect in approving his reasoning that the claim does not qualify requirement of the section, especially when the domicile of the deceased itself was in dispute.;


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