Controller of Estate Duty vs Estate of Late Durga Prasad Beharilal (by accountable person and Others)

Muktadar, J.—The Income Tax Appellate Tribunal has formulated the following question for our decision at the instance of the Controller of Estate Duty, Andhra Pradesh:

"Whether, on the facts and in the circumstances of the case, the entire residential house belonging to the HUF in which the deceased had 1/5th share was exempt u/s 33(1)(n) of the E.D. Act ?"

The facts are that the deceased, one Durga Prasad Beharilal, was the karta of a Hindu joint family consisting of himself, his wife and three sons. He died on November 18, 1970. The principal value of the estate, as admitted by the accountable persons, was Rs. 2,34,366, but the Asst. CED determined the principal value at Rs. 4,02,665. He valued the residential house in which the deceased was residing at Rs. 47,500, and allowed exemption u/s 33(1)(n) of the E.D. Act, 1953, only to the extent of 1/5th share of the deceased in the said house amounting to Rs. 9,500 and included the remaining 4/5ths share of the other coparceners therein in the principal value of the estate for aggregation u/s 34(1)(c) of the Act. The accountable persons preferred an appeal to the Appellate Controller, who reduced the value of the residential house to Rs. 44,000 and fixed the l/5th share of the deceased at Rs. 8,800. On further appeal, the Appellate Tribunal, however, observed that, according to Section 39(3), the valuation of the joint family property had to be made as if the deceased was the owner of the entire property and then his share therein taken as if there was a partition just before his death and that, since Section 33(1)(n) exempts one resi dential house from inclusion in the estate of the deceased for duty purposes, the entire residential house of the family would be exempt by extending the legal fiction introduced in Section 39(3).

A similar case (R.C. No. 30 of 1974 dated October 19, 1976) came up for consideration before a Bench of this court of which one of us (Muktadar J.) was a member. Therein, it was observed:

"So far as this aspect of the case is concerned, we are of the opinion that the amount of Rs. 74,880 being the entire value of the residential house in which the deceased had one-third share, the deceased''s 1/3rd share will have to be given exemption as per the provisions of Section 33(1)(n) of the E.D. Act. So far as the balance of the value is concerned, it is not in dispute that the two sons of the deceased are the coparceners and they would take two-thirds share in the house as coparceners. In these circumstances the share of the two coparceners cannot be brought into the estate of the deceased. So, having given exemption u/s 33(1)(n) to the extent of the share of the deceased and having held that, after deducting the one-third share of the deceased, the balance cannot be accounted in the estate of the deceased as that two-thirds share belongs to the coparceners, we find that the entire amount of Rs. 74,880 cannot be included in the estate of the deceased for the reasons mentioned above."

To our mind, in the instant case also, as pointed out already, the family was the joint family of which the deceased was the karta. Therefore, after giving exemption to the share of the deceased u/s 33(1)(n), the balance of the property cannot be taken into consideration because that belongs to the other coparceners in the property. We are, therefore, of the opinion that for reasons mentioned above the entire value of the property cannot be taken into consideration for purposes of estate duty of the deceased. The reference is answered accordingly. There will be no order as to costs. Advocate''s fee Rs. 250.