TMI Blog2004 (2) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... y from house property as contended by the Department?" – Both questions are answered in affirmative and in favour of the accountable person and against the Revenue. - - - - - Dated:- 4-2-2004 - Judge(s) : M. S. SHAH., A. M. KAPADIA. JUDGMENT The judgment of the court was delivered by M.S. SHAH J. - In this reference at the instance of the Revenue, the following questions have been referred for our opinion: "(1) Whether, the Appellate Tribunal is right in law and on facts in directing the Assistant Controller of Estate Duty to make valuation of the house property in accordance with rule 1BB of the Wealth-tax Rules? (2) Whether, the Appellate Tribunal is right in law and on facts in holding that as regards the deduction of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d deduction of Rs. 3,14,345 from the value of the house and, therefore, the value of the said property came to nil. Consequently, the deduction under section 33(1)(n) was not given. The accountable person filed an appeal before the Controller of Estate Duty (Appeals) who held that the deduction under section 44 in respect of the debt of Rs. 3,14,345 was allowable only from the value of the house property and not from the aggregate value of the entire property passing on death. He held that the house property had been correctly valued at Rs. 3,14,345 and that there was no question of grant of deduction under section 33(1)(n) of the Act. The accountable person went in appeal before the Tribunal. The Tribunal observed that one of the two g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... none appears for the respondent-accountable person. As far as question No. 1 is concerned, Mr. Desai has submitted that the Tribunal has erred in directing the Assistant Controller of Estate Duty to make valuation of the house property in accordance with rule 1BB of the Wealth-tax Rules; when rule 14 of the Estate Duty Rules, 1953 (hereinafter referred to as "the Rules"), specifically empowers the Controller himself to place a valuation on the property on his own estimate or appoint a person to appraise such properties and to set the valuation thereon. The Controller is not bound to accept the valuation as shown in the account delivered by the accountable person. Mr. Desai has further submitted that rule 14 was not considered by the Bomb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed is in accordance with the valuation under the Wealth-tax Act which is subsequently varied by an order in any proceeding under the Wealth-tax Act, the value earlier adopted under the Estate Duty Act shall be deemed to be a mistake apparent from the record and the Controller shall rectify the order accordingly. Explanation 2 provides that for the purposes of sub-section (3) of section 36, the expressions "net wealth", "valuation date" and "Wealth-tax Officer" shall have the same meanings as in the Wealth-tax Act. On the other hand, rule 14 of the Estate Duty Rules is a general rule applicable to all properties and is framed under section 41 of the Act. Section 41 reads as under: "41. Valuation to be made by the Controller.-Subject to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h-tax Act, 1957, in respect of his net wealth on the valuation date immediately preceding the date of his death". In such a case, the valuation as taken by the Wealth-tax Officer for the purposes of the assessment under the Wealth-tax Act is the principal value of such residential house or part thereof. Sub-section (3) of section 36 was inserted by the Estate Duty (Amendment) Act, 1982, with effect from March 1, 1981. The aforesaid legislative scheme, therefore, makes it mandatory for the authorities under the Estate Duty Act to adopt the valuation of the property under the Wealth-tax Act in respect of one residential house belonging to the deceased (which is to be specified by the accountable person at his or her option) which is assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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