K.S. Viswanathan, Accountant Member - (1.) THIS is a departmental appeal. The issue involved is the computation of the value of the properties held by the HUF, of which the deceased was a member. THIS computation has to be done under Section 39 of the Estate Duty Act, 1953 ('the Act').
(2.) The deceased was a member of a HUF. The family had made a gift of Rs. 10,000 to one of the members of the family. The deceased had died within a period of two years from the date of the gift. According to the Assistant Controller, in computing the value of the assets of the HUF the gift made by the family within two years period of death has to be included. On appeal, the Appellate Controller held that gift made by the deceased alone will have to be included under Section 9 of the Act. The HUF is a separate legal entity and, therefore, this section cannot cover such gifts. On that ground, he deleted the inclusion. The department is on appeal before us. Shri Chawla, for the department, submitted that on a proper reading of Section 39(3) it would be seen that the sub-section creates a legal fiction; that legal fiction is to assume that the properties of the HUF would be the properties of the individual-deceased. The sub-section clearly states that all the provisions of the Act shall apply as they would have applied if the whole of the joint family property had belonged to the deceased. Section 9 being one of the sections, that also will have to be applied. Therefore, he submitted that the Assistant Controller was correct in his order. He has relied on the commentary of Shri V. Balasubramaniam on 'Law & Practice of Estate Duty', Third edition, wherein the learned author has opined that such an inclusion is warranted by the wording of the section.
(3.) WE have considered the submissions. Section 39 deals with 'the valuation of interest in corparcenary property ceasing on death'. This is the marginal note. Though the marginal note will not control the provisions of the section, the intention unless otherwise clear from the section itself is that the provisions of Section 39 would apply for all valuations. Now, Sub-section (1) of Section 39 states that the value of the benefit accruing or arising from the cesser of a coparcenary interest shall be the principal value of the shares in the joint family property which would have been allotted to the deceased had there been a partition immediately before his death. Sub-section (2) states the same thing but with reference to other schools of law like Marumakkattayam or Aliyasantana. So, Sub-sections (1) and (2) lay down the rules for finding out what is the extent of the cessor of interest. In both the sections, the cessor of interest is fixed to the share the deceased would have received had there been a partition on the date of death.;