1976 (10) TMI 53 - AT - Income Tax

Tribunal includes house property in deceased's taxable estate, adjusts valuation due to title issues

The tribunal upheld the inclusion of the house property in the deceased's taxable estate based on the beneficial interest accrued by the deceased, despite ... - Issues:1. Validity of inclusion of house property in taxable estate.2. Valuation of the house property.Detailed Analysis:Issue 1: The validity of inclusion of the house property at Rourkela in the taxable estate of the deceased is disputed. The deceased purchased a portion of land and constructed a building without proper documentation. The Assistant Controller of Estate Duty included the value of the property in the estate based on rental income. The Appellate Controller upheld this decision, stating that any interest accrued by the deceased is includible in the estate. The accountable person argued that the deceased did not have a valid title to the land and, therefore, could not dispose of the property. However, the tribunal found that the deceased had peaceful possession of the property, paid taxes, and enjoyed the income, indicating a beneficial interest. The tribunal referred to the Estate Duty Act, stating that the change in beneficial interest upon death justifies the inclusion of the property in the taxable estate.Issue 2: Regarding the valuation of the disputed property, the tribunal agreed with the method adopted by the lower authorities but considered the defective title in the land. It was presumed that the property was not free from encumbrances due to the title issue. The multiplier of 16 times the net rental income was deemed excessive, and the tribunal reduced it to 13 times. The appeal was partly allowed, indicating a compromise in the valuation of the property to address the title defect and encumbrances.