1979 Supreme(All) 581

High Court Of Allahabad
C.S.P. Singh, R.R. Rastogi, JJ.

Maharani Raj Laxmi Kumari Devi – Appellant
Versus
Controller Of Estate Duty – Respondent
Estate Duty Reference 600 of 1976
Decided On : Oct 16,1979

The value of the share of the lineal descendant of the deceased in the joint family property was includible under Section 4(1)(c) for rate purposes and the estate duty chargeable under Section 5 of the Estate Duty Act was not deductible for computing the principal value of the property passing on the death of the deceased.

Headnote:

ESTATE DUTY - Valuation of property - Coparcenary interest - Whether the value of the share of the lineal descendant of the deceased in the joint family property was includible under Section 4(1)(c) for rate purposes - Whether the estate duty chargeable under Section 5 of the Estate Duty Act was deductible for computing the principal value of the property passing on the death of the deceased - Valuation of Neel Bagh Palace.

Fact of the Case:

Maharaja Pateshwari Prasad Singh died on 30th June, 1964, leaving behind his widow, Maharani Raj Laxmi Devi, the accountable person, and an adopted son as his legal heirs. The assessee claimed that the value of the share of the son in the joint family property should not be included in the principal value of the estate for rate purposes and that the estate duty chargeable under Section 5 of the Estate Duty Act was deductible for computing the principal value of the property passing on the death of the deceased. The Assistant Controller included the value of one-third share of the adopted son in the principal value of the estate for rate purposes and negatived the claim of the accountable person regarding deduction of estate duty. The Tribunal held against the assessee on both issues.

Finding of the Court:

The court held that the value of the share of the lineal descendant of the deceased in the joint family property was includible under Section 4(1)(c) for rate purposes and that the estate duty chargeable under Section 5 of the Estate Duty Act was not deductible for computing the principal value of the property passing on the death of the deceased. The court also held that the Tribunal was correct in holding that the self-occupied properties constructed prior to 1st January, 1951, were governed by the U.P. (Temporary) Control of Rent and Eviction Act, but the value could not be determined on the basis of the municipal assessment by applying a multiple to its net annual letting value calculated for the purposes of municipal assessment.

Issues: 1. Whether the value of the share of the lineal descendant of the deceased in the joint family property was includible under Section 4(1)(c) for rate purposes? 2. Whether the estate duty chargeable under Section 5 of the Estate Duty Act was deductible for computing the principal value of the property passing on the death of the deceased? 3. Whether the Tribunal was correct in holding that the self-occupied properties constructed prior to 1st January, 1951, were governed by the U.P. (Temporary) Control of Rent and Eviction Act, but the value could not be determined on the basis of the municipal assessment by applying a multiple to its net annual letting value calculated for the purposes of municipal assessment?

Ratio Decidendi: 1. Section 34(1)(c) of the Estate Duty Act permits an aggregation of the value of the interest of the lineal descendant in the principal value of the estate of the deceased. The proviso to Section 6 of the Hindu Succession Act, 1956, creates a fiction only for purposes of Section 6, which sets out the mode of devolution of interest in coparcenary property. It does not effect a partition by operation of law and does not destroy the existence of a coparcenary. 2. The amount of estate duty chargeable under Section 5 could not be deducted for purposes of computing the value of the property on death. 3. The valuation fixed for municipal assessment of buildings to which the U.P. (Temporary) Control of Rent and Eviction Act, 1947, applied is not a safe guide for determining the fair market value of the property.

Final Decision: The court answered the first two questions in the affirmative, and the third question by saying that the Tribunal is correct in holding that the self-occupied properties constructed prior to 1st January, 1951, were governed by the U.P. (Temporary) Control of Rent and Eviction Act, but the value could not be determined on the basis of the municipal assessment by applying a multiple to its net annual letting value calculated for the purposes of municipal assessment.