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Interpretation of section 35(3) of the Estate Duty Act regarding rebate on agricultural lands. Analysis: The case involved a reference under section 57 of the Estate Duty Act, 1953, regarding the applicability of the principle laid down in a Kerala High Court decision for giving rebate on agricultural lands under section 35(3) of the Act. The deceased left behind assets including movables, immovables, and agricultural lands. The Assistant Controller of Estate Duty computed the estate duty payable based on the assets passed on to the accountable person, including deductions and additions for rate purposes. The Appellate Controller and Tribunal upheld the applicability of the rebate under section 35(3) based on the value of the assets passed on. The Revenue contended that the value exceeded the threshold for the rebate to apply. The court analyzed the provisions of section 35(1), (3), and the Second Schedule of the Act. Section 5 established the charging of estate duty based on the principal value passing on the death of a person. Section 35(1) prescribed the rates of estate duty, while the Second Schedule outlined tax exemptions based on the principal value of the estate. Section 34 required the inclusion of lineal descendants' interests for rate purposes. In this case, the total value for rate computation included the share of lineal descendants, resulting in a higher aggregate value. The court focused on interpreting section 35(3) which provides a rebate for estates with agricultural land below a certain threshold. The court emphasized that the rebate applies based on the principal value of the estate passing to the accountable person, not the aggregated value for rate purposes. As the principal value in this case did not exceed the threshold, the court held that the rebate under section 35(3) was applicable. The court rejected the Revenue's argument that the aggregated value for rate purposes should determine the rebate eligibility, emphasizing that the relevant factor is the principal value of the estate. In conclusion, the court answered the question in favor of the accountable person, affirming the applicability of the rebate under section 35(3) based on the principal value of the estate passed on, as per the clear provisions of the Act.
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