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TMI Blog1982 (9) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... panies. He had executed a will bequeathing all his properties to his only son, the accountable person. The Asst. Controller, by his order dated November 27, 1971, determined the principal value of the estate as Rs. 4,03,449 and levied a duty of Rs. 36,992.65. In so doing, he included Rs. 83,629 as the value of the share of the lineal descendant in the property of the HUF under s. 34(1)(c) of the E.D. Act (hereinafter referred to as " the Act "). In computing the value of such share at Rs. 83,629, the Asst. Controller had included Rs. 19,500 being the value of his half share in the family residential house, after rejecting the contention of the accountable person that the value of his half share in the family residential house should not be included in the value of his half share of the joint family properties. Aggrieved by such assessment, the accountable person preferred an appeal to the Appellate Controller reiterating the contention that the value of his half share in the family residential house should not be included in computing the value of his half share in the properties of the HUF. The Appellate Controller held that though the deceased had right to execute a will in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Mitakshara, Marumakkattayam or Aliyasantana law in order to arrive at the share which would have been allotted to the deceased had a partition taken place immediately before his death, the provisions of this Act, so far as may be, shall apply as they would have applied if the whole of the joint family property had belonged to the deceased. " As per the above provision, for the purpose of estimating the principal value of the joint family property of a Hindu family governed by the Mitakshara, Marumakkattayam or Aliyasantana law, in order to arrive at the share which would have been allotted to the deceased had a partition taken place immediately before his death, the provisions of the Act, so far as may be, shall apply as they would have applied if the whole of the joint family property had belonged to the deceased. In this case, it is not in dispute that the Hindu joint family of which the deceased was the karta was governed by the Mitakshara law. Therefore, for the purpose of determining the value of the property that passed on the death of the deceased, we have to determine the value of the share which would have been allotted to the deceased had there been a partition in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erties to the extent to which exemption has been given under s. 33(1)(n) will have to be taken out and then the aggregate of the remaining must be divided as if at the time of death there was a partition and the share that would have fallen to the deceased determined and the share so determined will be the share on which duty can be imposed under the Act and that if the deceased left behind lineal descendants, the extent of the shares of such lineal descendants has to be aggregated to the share of the deceased in the property in accordance with s. 34(1)(c) and the rate applicable to such aggregate value of the estate will have to be taken into account. However, after laying down the said proposition consistently with s. 39(3), the Bench has taken the view that since the share of the deceased alone in the residential house passes on death, the exemption under s. 33(1)(n) should be limited to his interest if it is more than one lakh of rupees. This view has been followed in T. Sundaresa Mehta v. CED [1981] 127 ITR 107 (Mad) and CED v. N. L. S. V. Lakshmanan Chettiar [1982] 134 ITR 677 (Mad), wherein after referring to the mode of valuation of the deceased's share suggested in CED v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate of the deceased or for rate purposes. We are of the view that if s. 39(3) is properly applied, there will be no question of exemption being given for the deceased's share alone in the residential house and denying that benefit of exemption to the share of the lineal descendants as has been held in some of the decisions. Section 39(3) provides that if the deceased was a member of a joint family, firstly, the principal value of the family properties as a whole should be determined on the assumption that all the properties of the joint family belonged to the deceased, and the principal value of the deceased's share has then to be determined again assuming as if a partition had taken place in the family on the date of death of the deceased. The determination of the principal value of the share of the deceased in the joint family automatically determines the share of the other members as also of the lineal descendants. At the stage of the determination of the principal value of the properties of the family as a whole, treating them as belonging to the deceased, we have to give effect to the exemption provision contained in s. 33(1)(n). Since the Legislature has given a mandate to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mily properties if a partition has taken place on the date of death of the deceased will be half of four lakhs of rupees, that is, two lakhs of rupees and if exemption is to be given under s. 33(1)(n) to the deceased's half share alone in the residential house, the principal value of his share in the joint family will come to two lakhs of rupees minus seventy-five thousand rupees, that is, Rs. 1,25,000, while the lineal descendant's share will be Rs. 2,00,000, because he will not be entitled to an exemption under s. 33(1)(n) as his share did not pass on the death of the deceased. Thus, for rate purposes, the principal value of the deceased's share comes to Rs. 1,25,000 and that of the lineal descendant comes to Rs. 2,00,000. This inequality will not arise, if, as already stated, s. 39(3) is properly given effect to, that is the exemption under s. 33(1)(n) is given at the stage of determination of the principal value of the properties of the joint family in entirety and then apportioning the shares of all the coparceners including that of the lineal descendants. We are, therefore, of the view that Rs. 19,500 being the value of the accountable person's half share in the family resid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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