Obul Reddi, C.J. - (1.) THE first two questions in this reference are referred at the instance of the accountable person and the third question at the instance of the revenue under Section 64(1) of the Estate Duty Act, 1953.
(2.) QUESTIONS Nos. 2 and 3 may first be quoted : "2. Whether estate duty payable on the passing of the property of the deceased is not deductible in ascertaining the principal value of the estate ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the entire residential house belonging to the HUF in which the deceased had only 1/2 share was exempt under Section 33(1)(n) of the E.D. Act - So far as question No. 2 is concerned, it is covered by the judgment of this court in CED v. Estate of Late Omprakash Bajaj . Having regard to the view expressed therein, this question is answered in the affirmative and against the accountable person. Similarly, question No. 3 referred at the instance of the revenue is covered by the judgment of this court in E.D.C. No. 7 of 1975 dated October 13, 1977 [CED v. Durga Prasad Beharilal - -since reported in ]. In view of the opinion expressed by this court, this question is answered in favour of the accountable person. The only question that survives for our decision is question No. 1 and it reads: "Whether an adopted son can be regarded as a lineal descendant within the meaning of Section 34(1)(c) of the E.D. Act, 1953 -
(3.) THE facts necessary for answering that question are these: One Nuli Lakshminarayana (deceased) and his adopted son, N.V. Somaraju (accountable person) constituted a HUF governed by the Mitakshara law. Lakshminarayana died on March 6, 1966. THE adopted son, Somaraju, being the accountable person, rendered an account of the deceased's estate before the Asst. CED showing the principal value of the estate at Rs. 11,07,936. It was claimed before the Asst. CED that the share of Somaraju, the lineal descendant, cannot be aggregated under Section 34(1)(c) of the Act in arriving at the dutiable estate. That contention was negatived by the Asst. CED. He fixed the principal value of the estate at Rs. 17,65,450. THE appeal preferred by the accountable person was also dismissed. On further appeal to the Tribunal, it was contended on behalf of the accountable person that an adopted son is not a lineal descendant and, therefore, it was not correct to aggregate his share of the joint family property under Section 34(1)(c) for purposes of arriving at the principal value of the estate. As the Tribunal rejected the contention, it affirmed the order of the Appellate Controller. Hence, the reference. Mr. D.V. Sastry, appearing for the accountable person, strenuously contended that the authorities below were in error in construing the expression "lineal descendant" as equivalent to a coparcener and importing the fiction introduced in Section 12 of the Hindu Adoptions and Maintenance Act for the purpose of construing the expression "lineal descendant". Our answer to the question referred will depend upon the interpretation we give to the expression " lineal descendant" occurring in Section 34(1)(c) of the Act.;