V.K. Singhal, J. - (1.) THE Income-tax Appellate Tribunal has referred the following question of law arising out of its order dated September 14, 1982, under Section 64(1) of the Estate Duty Act, 1953 : "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in holding that the share of the lineal descendants in the coparcenary house property was not includible in the principal estate of the assessee for rate purpose under Section 54(1)(c)?"
(2.) THE facts as stated by the Assistant Controller of Estate Duty, Jaipur, in his order dated February 5, 1980, are that the deceased had a 1/5th interest in the residential family house property belonging to the deceased, his wife and three sons. It was claimed that the value of the family property should be exempt under Section 33(1)(n) as its value was below Rs. 1,00,000. According to the Assistant Controller of Estate Duty, the value of the house property was assessed at a figure of Rs. 65,000. THE house property was assessed in land and building tax as on March 1, 1973, at a figure of Rs. 56,500. THErefore, in order to estimate the value as on April 1, 1973, the Assistant Controller considered it at a figure of Rs. 1,00,000 and the 1/5th share of the deceased therein was exempted and the 3/5ths share of the three legal representatives was held liable to be included in the estate for rate purposes. In appeal, the Appellate Controller of Estate Duty following the decision in CED v. Estate of Late Durga Prasad Beharilal [1979] 116 ITR 692 (AP), the said amount was directed to be excluded from the principal value of the estate. The Income-tax Appellate Tribunal asked a question from the Departmental Representative as to whether the deceased alone was residing in the house in dispute or the lineal descendants were also residing therein. Since he was not in a position to correctly state the facts, therefore, the Appellate Tribunal came to the conclusion that the deceased was occupying the house exclusively before his death and, therefore, the entire house was held not includible in the principal value of the estate passing on his death in view of the provisions of Section 33(1)(n) of the Estate Duty Act. The Tribunal, therefore, came to the conclusion that the value of interest of the lineal descendants was not includible under Section 34(1)(c) of the Estate Duty Act. No one has appeared on behalf of the respondent. The arguments of learned standing counsel for the appellant have been heard. The provisions of Sections 33(1)(n) and 34(1)(c) are as under : "33. Exemptions. -- (1) To the extent specified against each of the clauses in this sub-section, no estate duty shall be payable in respect of property of any of the following kinds belonging to the deceased which passes on his death--. . . (n) 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." "34. Aggregation.--(1) For the purpose of determining the rate of the estate duty to be paid on any property passing on the death of the deceased,-- (a) all property so passing other than property exempted from estate duty under Clauses (c), (d), (e), (i), (j), (1), (m), (mm), (n), (o) and (p) of Sub-section (1) of Section 33 ; .... (c) in the case of property so passing which consists of a coparcenary interest in the joint family property of a Hindu family governed by the Mitakshara, Marumakkattayam or Aliyasantana law, also the interests in the joint family property of all the lineal descendants of the deceased member ; shall be aggregated so as to form one estate and estate duty shall be levied thereon at the rate or rates applicable in respect of the principal value thereof." The language such as is referred to in Section 34(1)(c) provides for aggregation of property passing on the death of the deceased in respect of the interest in the joint family property of all the lineal descendants and the exemption under Section 33(1)(n) is of one house or part thereof exclusively used by the deceased for his residence. The apex court in the case of Asst, CED v. V. Devaki Ammal [1995] 212 ITR 395, while reversing the decision of the Madras High Court, in V. Devaki Ammal v. Asst CED [1973] 91 ITR 24, has upheld the aggregation and constitutionality of the provisions of Section 34(1)(c) as under (at page 403) : "Section 34(1)(c) only provides for the rate of estate duty to be levied upon such benefit. For determining that rate the interests of all the lineal descendants of the deceased in the joint Hindu family property are to be aggregated so as to form one estate and estate duty is to be levied at the rate applicable to the principal value thereof. Sub-section (2) of Section 34 is put somewhat clumsily. It uses the expression 'property exempt from duty' and its Explanation defines the expression to include the interests of all coparceners other than the deceased in the joint family property. Where, therefore, the estate referred to in Clause (c) of Sub-section (1) of Section 34 includes the interests of coparceners, other than the deceased, which is the property exempt from estate duty, the estate duty leviable on the property not exempt, i.e., on the interest of the deceased, shall be calculated by application of this formula. What is the proportion of the value of the property not exempt to the value of the estate : that proportion of the amount payable on the estate is payable on the interest of the deceased."
(3.) ON a bare perusal of Section 33(1)(n) it is clear that the house which is exclusively used by the deceased 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 has been exempted. The finding which has been recorded by the Tribunal in the present case is that the said house was exclusively occupied by the deceased before his death and, therefore, the entire house was not includible in the principal value of the estate passing on his death. Shri Bapna submitted that so far as the interpretation of the Tribunal is concerned that the property which is exclusively used by the deceased would be exempt under the provisions of Section 33(1)(n) is not in dispute. The dispute is only that the coparceners' interest in the joint family property of the Hindu family governed by the Mitakshara, Marumakkattayam or Aliyasantana law, also, the interest of the lineal descendants of the deceased member in the property is to be aggregated so as to form the estate for the purpose of levy of duty or not. Under Section 34(2), Explanation (iii), provides that "property exempt from estate duty" means the interest of all coparceners other than the deceased in the joint family property of a Hindu family. So far as the wife is concerned she is not a lineal descendant and the property of the deceased being exempted under Section 33(1)(n) is not to be included for rate purposes. It is only the share of the lineal descendants in the joint family property which has to be included, and this point has not been properly considered by the Income-tax Appellate Tribunal. Inasmuch as the "interest" of the coparcener is different from the use of the property. The use of the property by the deceased may be in any manner even in respect of property which is not owned by him and, therefore, the provisions of Section 33(1)(n) cannot be construed so as to override the provisions of Section 34(1)(c). The exemption under Section 33(1)(n) is only of the property which is owned or belonging to the deceased and passes on his death. The property which is owned by the lineal descendants of the deceased or in which they have interest (and it is not in dispute that they had interest to the extent of 3/5th of the property) the same is liable to be included in accordance with the provisions of Section 34(1)(c). ;