Inclusion of lineal descendant's share in estate value deemed unconstitutional. New appeal points permitted.

The court held that the inclusion of the lineal descendant's share in the principal value of the estate was improper, as it was inconsistent with the Constitution. The court also ruled that raising a new point in appeal before the Tribunal was permissible, citing Supreme Court decisions. The decision favored the accountable person, directing the Department to pay costs and granting leave to appeal to the Supreme Court on both issues.

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Issues Involved:

1. Inclusion of the lineal descendant's share in the principal value of the estate.
2. Permissibility of raising a new point in appeal before the Tribunal.

Summary:

1. Inclusion of the Lineal Descendant's Share:

The primary issue was whether the inclusion of the lineal descendant's share in the principal value of the estate was proper. The Tribunal, citing the decision in *V Devaki Ammal v. Asst CED [1973] 91 ITR 24*, held that section 34(1)(c) of the Estate Duty Act, 1953, which mandates the clubbing of the deceased's undivided share in Mitakshara coparcenary property with the shares of the deceased's lineal descendants, is inconsistent with Article 14 of the Constitution and thus void. Consequently, the Tribunal's decision to exclude the lineal descendant's share from the principal value of the estate was upheld. The court answered this question in the affirmative and against the Department.

2. Permissibility of Raising a New Point in Appeal:

The second issue was whether the accountable person could raise a new point regarding the inclusion of the lineal descendant's share u/s 34(1)(c) for the first time before the Tribunal. The Department argued that the accountable person, having not raised this point at earlier stages, was precluded from doing so in the appeal before the Tribunal. However, the court held that an objection can be raised at any stage, and the Tribunal has the jurisdiction to entertain and decide new points of law or fact. The court referenced three Supreme Court decisions (*CIT v. McMillan & Co. [1958] 33 ITR 182*, *Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232*, and *CIT v. Mahalakshmi Textile Mills Ltd. [1967] 66 ITR 710*) to support the view that the Tribunal's appellate powers are co-equal to those of the assessing authority and can entertain new points raised for the first time in appeal. The court concluded that the Tribunal acted legitimately in entertaining the objection and rendering a decision based on the ruling in *V Devaki Ammal's case [1973] 91 ITR 24 (Mad)*.

Conclusion:

The court's decision was in favor of the accountable person and against the Department on both issues. The Department was directed to pay the costs of the reference. Additionally, leave to appeal to the Supreme Court was granted on both questions under section 65 of the Act, considering the importance of the subject matter and the potential conflict with a recent Supreme Court decision in *Addl. CIT v. Gurjargravures (P.) Ltd. [1978] 111 ITR 1*.

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