TMI Blog1980 (9) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... ances of the case, the Tribunal was correct in not deleting the full value of the residential house belonging to the Hindu undivided family under section 33(1)(n) of the Estate Duty Act ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in not deleting the addition of interest under section, 34 (4) of the Estate Duty Act of Rs. 8,880 on the amounts gifted by the deceased within two years of death ? and (4) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in upholding the addition of Rs.4,890 being 1/4th share of the deceased in the enhanced value of the closing stock held by the firm, M/s. Ratilal Manekji, in which he was a partner ? " The material facts givin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities was against the rejection of her claim for exemption of the full value of the residential house belonging to the HUF under s. 33(1)(n) of the Act. Third ground related to the inclusion of Rs. 8,880 as accrued interest on a sum of Rs. 1,11,000 gifted by the deceased within two years of his death. Lastly, the accountable person had challenged the enhancement made by the Assistant Controller in the value of the closing stock of the firm, M/s. Ratilal Manekji, while working out the investment of the deceased in the said firm. The objections and the above claims were rejected by the Appellate Tribunal and the questions noted above have been referred for our opinion at the instance of the accountable person. We will deal with these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .D. Act the value of the entire house qualified for exemption. This claim was rejected and it was held that the value of the deceased's share in the said house determined at Rs. 20,000 only qualified for exemption and not the value of the entire house. Section 33(1) provides for exemptions. Clause (n) thereof is as under : " 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." As only 1/4th share of the house belonged to the deceased, that share alone could be exempted under s. 33 and the accountable perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. Distinction has to be drawn between the income or profit accruing on the gifted property as a result of the investment made by the donee and income or profit accruing on such property which was already invested and was earning income when the gift was made. The distinction lies in the meaning of the word " accrued " appearing in s. 34(4) of the Act which is interpreted to contemplate something arising as a natural growth [see Hydrose v. CED [1971] 81 ITR 745 (Ker)]. Though in Hydrose's case, on facts, the court treated the business profits on the gifted amount as income accrued, the principle which was emphasised was that only such income will be treated as accrued which will arise on its own and not by any investment made indepe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etermined in the firm after valuing all the assets and liabilities and it was not open to the Assistant Controller to choose and value only one of the items of the assets. The contention was repelled by the Appellate Tribunal holding that s. 36 of the Act is clear that the properties are to be valued at the market rate. The Appellate Tribunal observed: " The contention of the accountable person that one of the items of the assets cannot be valued at the market rate unless the interest of the deceased is determined after taking into consideration all the assets and liabilities, is not acceptable." The Tribunal, therefore, held that the Asst. Controller was at liberty to value even one of the items of the assets of the firm in which the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r any property which he has brought in, much less over any other partnership property. He would not be able to exercise his right even to the extent of his share in the business of the partnership." It is a well-known law that a partner has no right or interest in specie in the common asset or property belonging to the partnership. His right merely extends to what he is entitled after all the partnership accounts are taken and his share in the partnership is ascertained. [See PL. RM. Arunachalam Chettiar v. CED [1970] 75 ITR 28 (Mad)]. Nanawati on The Estate Duty Act, 3rd Edn., at p. 485, while commenting on s. 36, in relation to the valuation of business, observes as under : Hence, in valuing the share of a deceased partner in a firm, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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