GUNVANTIBAI Vs. CONTROLLER OF ESTATE DUTY
LAWS(MPH)-1980-9-2
HIGH COURT OF MADHYA PRADESH
Decided on September 05,1980

GUNVANTIBAI Appellant
VERSUS
CONTROLLER OF ESTATE DUTY Respondents





Cited Judgements :-

SHYAMSUKH GARG VS. CONTROLLER OF ESTATE DUTY [LAWS(MPH)-1982-10-7] [REFERRED TO]
CONTROLLER OF ESTATE DUTY VS. ILLYAS ASSAM ARBI [LAWS(ORI)-1990-8-24] [REFERRED TO]
JAI KUMAR KARNANI VS. CONTROLLER OF ESTATE DUTY [LAWS(CAL)-1991-12-4] [REFERRED TO]
CONTROLLER OF ESTATE DUTY VS. KISMAT RAI KHANNA [LAWS(P&H)-1997-9-80] [REFERRED TO]
CONTROLLER OF ESTATE DUTY VS. NIRMALA SAXENA [LAWS(RAJ)-1995-1-65] [REFERRED TO]
CONTROLLER OF ESTATE DUTY VS. RAMESHWAR LAL KHETAWAT [LAWS(RAJ)-1995-1-75] [REFERRED TO]


JUDGEMENT

Shukla, J. - (1.)APPELLATE Tribunal, Indore Bench, Indore, has stated the case and referred the following questions for the opinion of this court under Section 64 of the E.D. Act:
"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in confirming the addition of Rs. 3,60,246 being share of the two lineal descendants for rate purposes under Section 34(1)(c) of the Estate Duty Act ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in not deleting the full value of the residential house belonging to the Hindu undivided family under Section 33(1)(n) of the Estate Duty Act ?

(3) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in not deleting the addition of interest under Section 34(4) of the Estate Duty Act of Rs. 8,880 on the amounts gifted by the deceased within two years of death ? and

(4) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in upholding the addition of Rs, 4,890 being 1/4th share of the deceased in the enhanced value of the closing stock held by the firm, M/s. Ratilal Manekji, in which he was a partner ? "

(2.)THE material facts giving rise to these questions are as follows. Shri Ratilal Manekji expired on June 23, 1970. He was the karta of the HUF consisting of himself, his wife and two children. On his death his widow, Smt. Gunvantibai, submitted an account of the estate of the deceased and declared the principal value of the estate at Rs. 2,01,309. THE Assistant Controller, after granting relief under Sections 23 and 33 of the E.D. Act, determined the principal value of the property of the deceased at Rs. 2,81,545. For rate purpose he added the shares of the two lineal descendants at Rs. 3,60,246 and the total value including this amount was determined at Rs. 6,41,791. THE Assistant Controller made an addition of Rs. 8,880 as interest accrued on two gifts for a sum of Rs. 1,11,000 made by the deceased within two years of his death. According to the Assistant Controller this interest had accrued on the gifts and had formed part of the estate of the deceased. THE deceased was a partner in the firm, M/s. Ratilal Manekji. THE accountable person had shown investment of the deceased in this firm at Rs. 3,619. THE Assistant Controller revalued the closing stock and enhanced the interest of the deceased in the firm by Rs. 4,890. THE accountable person objected before the Appellate Controller and the Appellate Tribunal to the inclusion of the share of the two lineal descendants for rate purposes to the principal value of the estate of the deceased. Second ground raised by the accountable person before the appellate authorities was against the rejection of her claim for exemption of the full value of the residential house belonging to the HUF under Section 33(1)(n) of the Act. Third ground related to the inclusion of Rs. 8,880 as accrued interest on a sum of Rs. 1,11,000 gifted by the deceased within two years of his death. Lastly, the accountable person had challenged the enhancement made by the Assistant Controller in the value of the closing stock of the firm, M/s. Ratilal Manekji, while working out the investment of the deceased in the said firm. THE objections and the above claims were rejected by the Appellate Tribunal and the questions noted above have been referred for our opinion at the. instance of the accountable person.
We will deal with these questions in serial order.

Question No. 1 : This relates to the inclusion of the share of the two lineal descendants for rate purposes under Section 34(1)(c) of the Act. The contention was that this provision was ultra vires the Constitution and reliance was placed on Devaki Ammal v. Asst. CED [1973] 91 ITR 24 (Mad). There are several decisions which take a contrary view. T. R. Jayashankar v. Asst. CED [1972] 83 ITR 445 (Ker), Krishna Prasad v. Asst. CED [1972] 86 ITR 332 (AP), Komanduri Seshamma v. Asst. CED [1973] 88 ITR 82 (AP), N.V. Somaraju v. Govt. of India [1974] 97 ITR 97 (AP) and Ramanathan Chettiar v. Asst. CED [1970] 76 ITR 402 (Mad). Devaki Ammal's case [1973] 91 ITR 24 (Mad) was dissented from by the Punjab and Haryana High Court in Hari Ram v. Assi. CED [1975] 101 ITR 539.

(3.)IN fact the constitutional validity of Section 34(1)(c) of the E.D. Act, 1953, providing for aggregation of property and rates of duty could not be considered by the authorities constituted under the E.D. Act because these authorities are the creatures of the statute itself (see K. S. Venkataraman and Co. (P.) Ltd. v. State of Madras [1966] 60 ITR 112 (SC)). We, therefore, confirm the finding of the Appellate Tribunal and answer the question in favour of the revenue and against the accountable person.
Question No. 2 ; The HUF of which the deceased was the karta owned a residential house wherein the deceased had 1/4th interest. It was claimed by the accountable person that under Section 33(1)(n) of the E.D. Act the value of the entire house qualified for exemption. This claim was rejected and it was held that the value of the deceased's share in the said house determined at Rs. 20,000 only qualified for exemption and not the value of the entire house. Section 33(1) provides for exemptions. Clause(n) thereof is as under :

"One house or part thereof exclusively used by the deceased for his residence, to the extent the principal value thereof does not exceed rupees one lakh if such house is situate in a place with a population exceeding ten thousand, and the full principal value thereof, in any other case."



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