TaxTMI 
TaxTMI 
1997 (9) TMI 46
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....e in the self-occupied residential property. The other half belonged to Piare Lal, brother of Barkat Ram Khanna. The value of such house was shown at Rs. 35,153. Accountable person's case before the Asstt. CED was that since the value of the residential house was below Rs. 1 lac, it was totally exempt from the payment of estate duty and no part of it could be aggregated with the taxable estate. Asstt. CED, however, determined half share of the deceased in the HUF at Rs. 55,250 instead of Rs. 35,153, which had been shown in the return. Asstt. CED allowed exemption under s. 33(1)(n) of the Act in respect of half share representing the deceased's share in the HUF and added half share, i.e., Rs. 27,625 of the lineal descendants under s. 34(1)(c) of the Act for aggregation purposes. Accountable person filed an appeal before the ACED and contended that no addition could be made for rate purposes on account of the HUF residential house as its value was less than Rs. 1 lac. Appeal was accepted by the first appellate authority, who deleted the addition of Rs. 27,625 made in the estate for aggregation purposes. It was held that the value declared of the house was less than Rs. 1 lac and t....
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....e and estate duty shall be levied thereon at the rate or rates applicable in respect of the principal value thereof. . ." Question for determination is as to whether the share of lineal descendants in the HUF could be taken into consideration for the aggregation purposes under s. 34(1)(c) of the Act, of the property which was exempted from estate duty under s. 33(1)(n) of the Act. Andhra Pradesh High Court in Estate of Late Durga Prasad Beharilal's case took the view that it could not be done. It was held : "That the deceased had only 1/5th share in the undivided residential house which was exempt under s. 33(1)(n) and value of the balance 4/5ths share of the house property cannot be taken into consideration for the purpose of determination of the net principal value of the estate of the deceased inasmuch the said 4/5ths share belonged to other coparceners. Therefore, the value of the entire house is liable to be excluded from the net principal value of the estate." The same view was taken by the Andhra Pradesh High Court in K. Venugopal vs. CED [1983] 36 CTR (AP) (FB) 334 : [1983] 143 ITR 988 (AP) (FB). Madras High Court in CED vs. D. Rajasekaran Kamak [1983] 36 CTR....
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....erty belonging to the deceased which passes on his death. Now, in the case of a house belonging to an HUF, the house cannot be said to belong wholly to a member and, thereon if a member of such a family dies, the exemption under s. 33(1)(n) cannot operate for the entire house but will be limited to the extent of the interest held by the deceased member in the house. The interest of the lineal descendants of the deceased member in the house does not belong to the deceased and cannot be said to pass on his death and, therefore, such an interest does not qualify for any exemption under s. 33(1)(n). Sec. 34 permits aggregation of the interest in the joint family property of all the lineal descendants of the deceased for rate purposes. This is clear by a reading of ss. 34(1)(a) and s. 34(2). But s. 34 nowhere provides that in making the aggregation of the interest in the joint family property of the lineal descendants the aggregation would not cover such property of the descendants which would have qualified for exemption had any one of them died. There is no room for applying the provisions dealing with exemption at the stage of aggregation of the interest in the joint family property ....
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....f the deceased in the joint family property, exemption of the value of his interest in the residential house of the family has to be allowed under s. 33(1)(n). Thereafter, the value of the interest in the joint family property of all the lineal descendants of the deceased is to be added to the principal value of the interest of the deceased minus the exemption allowed to him under s. 33 (1)(n). It is on this aggregate amount that the rate of estate duty is to be applied subject to this that the inclusion of the value of the interest of the lineal descendants in the joint family property is merely for rate purposes as is clear from s. 34(2). In our opinion, the Tribunal was wrong in applying the fiction contained in s. 39(3) to extend the exemption under s. 33(1)(n) so as to cover the value of the interest of the lineal descendants in the residential house." The Bench specifically disagreed with the view expressed by the Andhra Pradesh High Court in Estate of late Durga Prasad Beharilal's case and agreed with the view expressed by the Karnataka High Court in K. Nataraja's case and Allahabad High Court in Madan Mohan's case . Similar is the view expressed by the other High Cour....