Binding invalidation and residential house exemption under estate duty were applied to the deceased's ascertained share, not the whole property.

A binding declaration that section 34(1)(c) of the Estate Duty Act was ultra vires had to be applied in subsequent assessment proceedings, so the Tribunal erred in refusing to entertain an additional ground based on that declaration; the point was therefore to be considered in favour of the assessee. For exemption under section 33(1)(n), the residential house held as joint family property had first to be valued as a whole and the deceased's share ascertained, and the exemption was then confined to that share, subject to the statutory ceiling; this method was upheld in favour of the revenue.

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Issues: (i) Whether the Tribunal was justified in refusing to entertain the additional ground based on the declared invalidity of section 34(1)(c) of the Estate Duty Act, 1953. (ii) Whether the exemption under section 33(1)(n) of the Estate Duty Act, 1953 is to be computed on the value of the deceased's share after first determining that share in the residential house.

Issue (i): Whether the Tribunal was justified in refusing to entertain the additional ground based on the declared invalidity of section 34(1)(c) of the Estate Duty Act, 1953.

Analysis: The earlier declaration that section 34(1)(c) was ultra vires had already rendered the provision inapplicable in the State. The additional ground did not raise a fresh vires challenge before the Tribunal but sought application of the binding declaration to the assessment. The Tribunal therefore misdirected itself in treating the ground as beyond its competence.

Conclusion: The Tribunal was not justified in rejecting the additional ground and the point had to be considered on the basis of the binding declaration; this issue was answered in favour of the assessee and against the revenue.

Issue (ii): Whether the exemption under section 33(1)(n) of the Estate Duty Act, 1953 is to be computed on the value of the deceased's share after first determining that share in the residential house.

Analysis: The exemption provision applies to one house exclusively used by the deceased for residence, but where the house forms part of joint family property the property must first be valued as a whole and the deceased's share ascertained. The exemption is then restricted to the value of that share, up to the statutory ceiling of one lakh rupees. The earlier decision on the same provision furnished the governing method of computation.

Conclusion: The exemption under section 33(1)(n) has to be computed after determining the deceased's share in the residential house, and not on the entire house value; this issue was answered against the assessee and in favour of the revenue.

Final Conclusion: The reference was disposed of by holding that the Tribunal must apply the binding invalidation of section 34(1)(c), while exemption under section 33(1)(n) is limited to the deceased's share after valuation of the house as a whole.

Ratio Decidendi: A binding judicial declaration that a taxing provision is ultra vires must be applied in subsequent proceedings, and exemption for a residential house held in joint family property is to be computed on the deceased's ascertained share after valuing the property as a whole.

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