Estate duty on HUF residential house turns on deemed partition share and aggregation for rate purposes.

Under the Estate Duty Act, exemption for a residential house owned within a Hindu undivided family applies only to the property or share that actually passes on the death of the deceased. For Mitakshara coparcenary property, the relevant test is the principal value of the share that would be allotted to the deceased on a notional partition immediately before death. The exemption clause cannot be read in isolation from the provisions on cesser of coparcenary interest and aggregation for rate purposes. On that basis, the entire house is not exempt, and the share of lineal descendants remains relevant for rate computation.

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Issues: Whether the entire residential house occupied by the deceased, as karta of a Hindu undivided family, was exempt from estate duty and whether the share of the lineal descendants was excluded from rate purposes under the Estate Duty Act, 1953.

Analysis: Exemption under the relevant provisions applies only to the property, or the share in it, which actually passes on the death of the deceased. In the case of joint family property governed by Mitakshara law, the decisive inquiry is the principal value of the share that would have been allotted to the deceased if a partition had occurred immediately before death. The Tribunal erred in treating the exemption clause in isolation and in ignoring the effect of the provision governing the cesser of coparcenary interest and aggregation for rate purposes.

Conclusion: The entire house was not exempt. Only the deceased's share could be treated according to the statutory scheme, and the half share of the lineal descendants was liable to be included for rate purposes.

Ratio Decidendi: Under the Estate Duty Act, exemption and aggregation in respect of joint family residential property depend on the share that passes on the death of the deceased, as determined by the deemed partition principle applicable to coparcenary interests.

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