Estate-duty valuation of mining lease term must reflect statutory reduction and market value on death, not arbitrary estimates.

Estate-duty valuation of a mining lease's unexpired term must be fixed at market value on the date of death, taking account of statutory power to alter existing lease conditions and any retrospective modification that reduces the lease period. An arbitrary estimate unsupported by principle or evidence is not a lawful basis for valuation, and the possibility of lease-term reduction is a relevant valuation factor. On that approach, the tribunal's use of an eight-year basis was not justified, and the reduced four-year term was the proper valuation basis.

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Issues: Whether the Appellate Tribunal was justified in adopting eight years as the basis for valuing the unexpired term of the mining lease instead of four years.

Analysis: The valuation of the estate was required to be made on the market value as on the date of death. On that date, the governing Act had already empowered the Central Government to frame rules altering pre-existing mining leases, and the rules in fact contemplated modification of the lease period to conform to the statutory scheme. The possibility of reduction of the lease term was therefore a relevant factor affecting valuation. The Tribunal, however, fixed eight years without laying down any principle and without evidence that a buyer would adopt that basis. The later notification, which altered the original lease terms with retrospective effect, showed that the unexpired period had to be reckoned on the basis of the reduced term.

Conclusion: The Appellate Tribunal was not justified in law in adopting eight years as the valuation basis. The proper basis was four years, in favour of the accountable person.

Ratio Decidendi: For estate-duty valuation, the unexpired term of a mining lease must be determined on the basis of the market value on the date of death, taking into account statutory power and subsequent retrospective modification of the lease terms, and not on an arbitrary estimate unsupported by evidence.

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