Estate Duty rebate threshold turns on principal value of the estate, not aggregation for rate purposes under section 34.

For rebate under section 35(3) of the Estate Duty Act, 1953, the controlling threshold is the principal value of the estate passing on death, not the enlarged aggregate adopted only for rate purposes under section 34. The aggregation of lineal descendants' interest under section 34 does not affect the section 35(3) limit because the provision is directed to the principal value of the estate passing to the accountable person. On that basis, where the principal value did not exceed Rs. 2 lakhs, the rebate was available.

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Issues: Whether, for the purpose of rebate under section 35(3) of the Estate Duty Act, 1953, the decisive limit is the principal value of the estate passing on death or the aggregate value adopted for rate purposes under section 34.

Analysis: Section 35(3) applies where the property passing on death consists wholly or partly of agricultural land and the principal value of the estate does not exceed Rs. 2 lakhs. The value relevant to this provision is the principal value of the estate passing to the accountable person, not the enlarged figure worked out by adding the lineal descendants' interest under section 34 for the limited purpose of determining the rate of duty. The aggregation under section 34 has no bearing on the threshold in section 35(3), because the non-obstante clause in that provision is directed to the principal value of the estate passing on death.

Conclusion: The rebate under section 35(3) was attracted because the principal value of the estate passing to the accountable person did not exceed Rs. 2 lakhs. The question was answered in the affirmative and against the Revenue.

Ratio Decidendi: For rebate under section 35(3) of the Estate Duty Act, 1953, the relevant limit is the principal value of the estate passing on death, and not the higher aggregate value arrived at by adding the lineal descendants' interest for rate purposes under section 34.

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