Estate duty exemption for a Hindu undivided family house is confined to the deceased's own interest, not descendants' share.

For estate duty purposes, the exemption for one residential house under section 33(1)(n) of the Estate Duty Act applies only to property belonging to the deceased and passing on death. In a Hindu undivided family house, only the deceased's own interest can qualify for that exemption; the lineal descendants' interest does not belong to the deceased and is not excluded by section 39(3). The statutory fiction in section 39(3) is limited to valuation of joint family property and cannot enlarge the scope of the exemption. The descendants' share is therefore aggregated under section 34(1)(c) for rate purposes, while exemption is confined to the deceased's share.

---

---

Issues: Whether, for estate duty purposes, the exemption for one residential house under section 33(1)(n) of the Estate Duty Act, 1953, could be extended by section 39(3) to cover the value of the lineal descendants' interest in a Hindu undivided family's house, and whether such value was to be excluded from aggregation under section 34(1)(c).

Analysis: The exemption under section 33(1)(n) applies only to property belonging to the deceased and passing on death. In a Hindu undivided family house, the deceased's interest alone can qualify for exemption, while the lineal descendants' interest neither belongs to the deceased nor passes on his death. Section 34(1)(c) and section 34(2) require aggregation of the lineal descendants' interest only for rate purposes and do not create any exemption at the aggregation stage. Section 39(3) creates a legal fiction only for estimating the principal value of the joint family property and cannot be extended beyond valuation so as to enlarge the scope of section 33 exemptions. The principal value must first be determined without applying section 33, and the exemption is then allowed only to the deceased's own share.

Conclusion: The value of the lineal descendants' share in the residential house was not exempt under section 33(1)(n) read with section 39(3), and was rightly includible for rate purposes under section 34(1)(c).

Final Conclusion: The reference was answered against the accountable person and in favour of the department, holding that the statutory fiction in section 39(3) does not enlarge the residential house exemption beyond the deceased's own interest.

Ratio Decidendi: A statutory fiction created for valuation cannot be extended to enlarge an exemption, and an exemption from estate duty applies only to the deceased's own property interest passing on death.

---