1987 (7) TMI 187 - AT - Income Tax

Tribunal rules on estate valuation: charge without written document disallowed as deduction

MRS. BHARATHI HARIHARAN. Versus ASSISTANT CONTROLLER OF ESTATE DUTY.

The Appellate Tribunal ITAT MADRAS-A directed the Assistant Controller to accept the value of properties in the estate as shown by the accountable person ... - Issues: Valuation of properties in estate for wealth-tax assessment, Deduction claim of Rs. 80,000 from estate value, Interpretation of charge creation without a written document, Consideration of charge in reducing estate value, Allowability of deduction under s. 44 for personal obligation, Rejection of claim for estate valuation, Goodwill valuation not pressed.In the judgment by the Appellate Tribunal ITAT MADRAS-A, the first issue pertained to the valuation of properties in the estate for wealth-tax assessment. The accountable person had shown the value as per the wealth-tax assessment, but the authorities had enhanced it. The Tribunal directed the Assistant Controller to accept the value as shown by the accountable person, citing Circular No. 1-D/ED. The second issue revolved around a deduction claim of Rs. 80,000 from the estate value. The claim was based on an alleged charge created by the deceased for his daughter's marriage, supported by affidavits. The Revenue contended that no charge had been created in writing before the death, and even if it existed, it could not be considered for deduction. The Tribunal, citing the Supreme Court case of M.L. Abdul Jabbar Sahib vs. H. Venkata Sastri & Sons, clarified that a charge could be made without a written document.Further, the Tribunal analyzed whether a charge was created and if it affected the deceased's property rights. Referring to the Supreme Court case of Dattatreya Shanker Mote & Ors. vs. Anand Chintaman Datar & Ors., the Tribunal explained the nature of a charge as a security for payment without creating an interest in the property. Even if a charge was established, it did not diminish the deceased's full ownership rights. The Tribunal rejected the claim that the charge was in discharge of the deceased's obligation to maintain and marry his daughter, citing the Madras High Court case of G. Sheenbbaagammal vs. CED. The Tribunal emphasized that the charge was a personal encumbrance and not created for full consideration, thus disallowing it as a deduction under s. 44.Moreover, the Tribunal dismissed the argument for allowing a discount in estate valuation due to the existence of the charge, stating that what cannot be allowed under s. 44 directly cannot be permitted indirectly in determining the estate's market value. Finally, the Tribunal noted that the ground related to the valuation of goodwill was not pressed and, as a result, treated the appeal as partly allowed.