Controller of Estate Duty vs Suresh Kumar Mirani

G.G. Sohani, actg. C.J.

By this reference u/s 64(1) of the Estate Duty Act, 1953 (hereinafter referred to as "the Act"), the Income Tax Appellate Tribunal, Jabalpur Bench, Jabalpur, has referred the following question of law to this court for its opinion :

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in law in holding that the share falling to the widow of a pre-deceased son cannot be aggregated u/s 34(1)(c) of the Estate Duty Act to determine the dutiable estate of the deceased ?"

The material facts giving rise to this reference, briefly, are as follows : one Jaisukhlal died on December 4, 1975, leaving behind him five sons and his wife. The dispute relates to the determination of the rate of estate duty payable on the property passing on the death of the deceased. One of the sons of the deceased, Jayantilal, had pre-deceased him and Smt. Labhu Ben, w/o Jayantilal, became entitled to the share that would have fallen to Jayantilal had he been alive. The Assistant Controller of Estate Duty, acting u/s 34(1)(c) of the Act, aggregated the share falling to Smt. Labhu Ben for the purpose of determining the rate of estate duty payable by the accountable person. On appeal, the Appellate Controller upheld the contention urged on behalf of the accountable person that the widow of Jayantilal, the pre-deceased son of Jaisukhlal, was not a lineal descendant of Jaisukhlal and, therefore, her interest in the coparcenary property should be excluded for the purpose of aggregation. Aggrieved by the order passed by the Appellate Controller of Estate Duty, the Revenue preferred an appeal, but that appeal was dismissed. The Revenue, therefore, sought reference and it is at the instance of the Revenue that the aforesaid question of law has been referred to this court for its opinion.

Learned counsel for the Revenue contended that the share falling to the widow of a pre-deceased son can be aggregated u/s 34(1)(c) of the Act. To appreciate this contention, it is necessary to refer to Section 34(1)(c) of the Act which reads as follows :

"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,--...

(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."

From a perusal of the aforesaid provision, it is clear that for the purpose of determining the rate of duty, the share of the lineal descendant has to be aggregated with the coparcenary interest of the deceased. Clause (c) of Section 34(1) of the Act expressly provides that the share of the lineal descendants alone will be taken into consideration for aggregation. Labhu Ben, widow of the pre-deceased son of Jaisukhlal, cannot be held to be a lineal descendant of Jaisukhlal. As held in Satyanarayan Saraf Vs. Assistant Controller, "A"-Ward, by the Calcutta High Court, for the purpose of aggregation u/s 34(1)(c), the principal value has to be first ascertained and that principal value as provided by Section 39 of the Act, is the value of the share of the deceased in the joint family property which would have been allotted to him had there been a partition immediately before his death. Now, if immediately before the death of Jaisukhlal, a partition had taken place between him and his sons, the widow of his predeceased son would have been entitled to a share by virtue of the provisions of the Hindu Succession Act, 1956. That share cannot be held to be the interest of a lineal descendant of the deceased. In our opinion, therefore, the Tribunal was justified, on the facts and in the circumstances of the case, in holding that the share falling to the widow of a pre-deceased son cannot be aggregated u/s 34(1)(c) of the Act for determining the rate of estate duty payable under the Act.

For all these reasons, our answer to the question referred to this court is in the affirmative and against the Revenue. In the circumstances of the case, parties shall bear their own costs of this reference.