Estate duty valuation of ceiling-bound agricultural land must reflect statutory restrictions and likely compensation, not full market value.

Agricultural land already subject to ceiling proceedings before death cannot be valued in estate duty as if it were freely marketable in full. The ceiling law and any operative order declaring part of the land surplus must be taken into account, even if the proceedings are under challenge or the surplus land has not yet physically vested in the State. The proper valuation approach is to separate land not likely to be surplus from land likely to be surplus, and to value the latter by reference to compensation reasonably payable under the ceiling law, allowing for delay in receipt. Rule 14(6) of the Estate Duty Rules also required consideration, though its application had not been clearly found.

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Issues: Whether the agricultural lands standing in the deceased's name were to be included and valued in the estate duty assessment without regard to the ceiling proceedings and the order declaring part of the land surplus.

Analysis: The land had been subjected to ceiling proceedings before the death, and the applicable ceiling law and the order made under it could not be ignored merely because the matter was under challenge or the surplus land had not yet physically vested in the State. The rights of the State and the liability of the landholder under the ceiling law had to be taken into account, and the valuation could not proceed as if the land were freely marketable in full. The proper approach was to separate the land ultimately not liable to be treated as surplus from the land likely to be surplus, and to value the latter on the basis of the compensation reasonably payable under the ceiling law, keeping the delay in receipt of compensation in view. Rule 14(6) of the Estate Duty Rules also required consideration, but no clear finding had been given on its application.

Conclusion: The valuation adopted by the lower authorities was not in law; the matter had to be re-determined in accordance with the ceiling law and the principles governing compensation-based valuation.

Ratio Decidendi: Where agricultural land is already under operative ceiling proceedings before the date of death, estate duty valuation must reflect the statutory ceiling restrictions and the likely compensation for surplus land, rather than the unrestricted market value of the land.

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