Estate duty exemption under section 33(2) affects rate only; donated property still counts for aggregation.

Donations to approved educational institutions and hospitals covered by a notification under section 33(2) of the Estate Duty Act were held includible in the estate for aggregation under section 34. The scheme of sections 33 and 34 distinguishes property wholly exempt under section 33(1), which is excluded from aggregation, from property granted further relief under section 33(2), which remains part of the aggregate estate even though no duty is levied on the exempt portion. The notification therefore affected only the rate calculation and did not create a complete exclusion from aggregation; the Appellate Authority's finding was upheld.

---

---

Issues: (i) Whether donations to approved educational institutions and hospitals, exempted by notification issued under section 33(2) of the Estate Duty Act, were liable to be aggregated under section 34 for the purpose of computing the rate of estate duty.

Analysis: Section 33(1) deals with classes of property wholly exempt from estate duty and excluded from aggregation, whereas section 33(2) empowers the Central Government to grant further relief by notification in respect of specified classes of property or persons. The notification relied upon used the expression that no estate duty shall be payable on the relevant donations, but the effect of that notification had to be read with section 34 governing aggregation. Section 34(1)(a) expressly excludes only the categories specified in section 33(1), while section 34(2) and its Explanation treat property exempt from estate duty under section 33 as includible for aggregation, though duty is not leviable on the exempt portion. On that scheme, the exemption under section 33(2) was construed as relief affecting the rate of duty, not as a total exclusion from aggregation.

Conclusion: The donations were includible in the estate for aggregation, and the exemption operated only at the stage of rate calculation; the finding of the Appellate Authority was upheld against the assessee.

Ratio Decidendi: A notification issued under section 33(2) of the Estate Duty Act granting that no estate duty shall be payable confers a limited exemption affecting the rate of duty, but does not exclude the property from aggregation under section 34.

---