JUDGMENT

1. The HUF consisting of L. Damodar Das (karta and his only son. Madan Mohan) owned a house in Kachcha Katra, Shahjahanpur. This was occupied by Lala Damodar Das for residential purposes. Lala Damodar Das died on April 15, 1967. The Assistant CED valued the house at Rs. 58,500. He added a half share (Rs. 29,250) in this house belonging to the son u/s 34(1)(c) of the E.D. Act for rate purposes.

2. On appeal, the Zonal Appellate Controller deleted this inclusion on the ground that the residential house was totally exempt under Clause (n) of Section 33(1) of the Act.

3. The department went up in appeal to the Tribunal. The Tribunal held that the exemption given by Clause (c) of Section 34(1) was total. In other words, the value of the residential house is not only excluded from the estate duty but is also excluded for the purposes of determining estate duty. Clause (c) of Section 34(1) deals with properties specifically excluded by Clause (a). Since one residential house is specifically excluded by Clause (a) of Section 34(1) even for the purposes of determining the rate of estate duty, the valuation of the house used by Damodar Das exclusively for his residential purposes could not be included in the estate of the deceased for rate purposes. On this view, the appeal was dismissed.

4. At the instance of the department, the Tribunal has referred the following question of law for the opinion of this court, u/s 64(1) of the Act :

" Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the value of the residential house exclusively used by Shri Damodar Das, deceased, member of the Hindu undivided family was not includible for rate purposes in view of the provisions of section 33(1)(n) read with sections 34(1)(a) and 34(1)(c) of the Estate Duty Act, 1953 ? "

5. u/s 7 of the E.D. Act, the share of an adult member of a Hindu coparcenary in joint family property passes on his death. Such share is to be determined on the footing that a notional partition had taken place immediately before his death (vide Section 39). Section 33 exempts properties mentioned in various clauses provided they belonged to the deceased and they passed on his death. Clause (n) of Section 33(1) makes a reference to the exemption of :

" one house or part thereof exclusively used by the deceased for his residence, to the extent the principal value thereof does not exceed rupees one lakh if such house is situate in a place with a population exceeding ten thousand, and the full principal value thereof, in any other case."

6. Under this provision residential house is exempt from payment of estate duty ; but this exemption is available provided the house belonged to the deceased and it passed on his death. In the case of a residential house belonging to the HUF, it is the share of the deceased which alone passes on his death. In the present case, the HUF consisted of two members only, viz., the deceased and his son. In view of Section 39 the share which will pass on the death of Damodar Das will be half. Thus, only a half share in the house could be said to belong to the deceased and it alone passed on his death. The properties mentioned in the various clauses of Section 33(1) are exempt from estate duty only in so far as they belong to the deceased and pass on his death. In the case of a residential house belonging to the HUF it is the share of the deceased which passes on his death. The value of such share alone in the residential house will be exempt from payment of estate duty under Clause (n). The Tribunal was in error in holding that the entire house was exempt under Clause (n).

7. Section 34 deals with the aggregation of property for determining the rate of estate duty. As already seen only a half share in the residential house under Clause (n) was exempt.

8. Clause (c) of Section 34(1) specifically provides that the interest in the joint family property of all the lineal descendants of a deceased member, in