Judgment:
Ashok Bhan, J.
1. The Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh (hereinafter referred to as 'the Tribunal'), has referred the following question of law along with the statement of the case to this court for its opinion :
'Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is right in holding that the share of three lineal descendants could not be aggregated with the share of the deceased for rate purposes ?'
2. The facts relevant to the question referred are :
3. Hari Kishan Das died on February 1, 1970, Ishwar Parshad, who was the next karta of the Hindu undivided family, in the capacity of the accountable person, filed the return of estate duty declaring a principal value at Rs. 92,396 which was later on revised to Rs. 1,19,612. The Assistant Controller of Estate Duty (hereinafter referred to as 'the Assessing Officer'), determined the share of the deceased to be 1/4th in the Hindu undivided family property and quantified the same to be Rs. 3,21,984. Taking recourse to Section 34(1)(c) of the Estate Duty Act, 1953 (hereinafter referred to as 'the Act'), he added the value of the share of three lineal descendants for rate purposes for determining the estate duty leviable. The contention of the accountable person that the share of the lineal descendants could not be added for rate purposes was not accepted. An appeal filed by the accountable person was dismissed by the Appellate Controller of Estate Duty. A further appeal was carried to the Tribunal, which was accepted.
4. The Tribunal placing reliance upon a judgment of the Madras High Court in V. Devaki Ammal v. Assistant CED : [1973]91ITR24(Mad) , accepted the appeal of the assessee and held that only the property which passes or which is deemed to have passed could be put to charge for estate duty under the provisions of the Act. Section 34(1)(c) was held to be a machinery section and not a charging section. It was held that the share of the lineal descendants could not be added for rate purposes. On behalf of the Revenue, reliance was placed upon a judgment of this court in Hari Ram v. Asst CED , judgment in Hari Ram's case , was noticed by the Tribunal but was not followed by observing that the said decision dealt with the constitutional validity of Section 54(1)(c) only and, therefore, had no applicability to the merits of the dispute in the present case.
5. Section 34(1)(c) of the Act, reads as under :
'34. Aggregation.--(1) For the purpose of determining the rate of the estate duty to be paid on any property passing on the death of the deceased--. . .
(c) in the case of property so passing which consists of a coparcenary interest in the joint family property of a Hindu family governed by the Mitakshara, Marumakkattayam or Aliyasantana law, also the interests 'in the joint family property of all the lineal descendants of the deceased member ;
shall be aggregated so as to form one estate and estate duty shall be levied thereon at the rate or rates applicable in respect of the principal value thereof.'
6. We have gone through Hari Ram's case , and find that the Tribunal has erred in observing that the same was not applicable to the facts of the present case. The Tribunal further erred in not following the law laid down by the jurisdictional High Court.
7. In Hari Ram's case , the Assistant Controller of Estate Duty, assessed the accountable person by adding a sum of Rs. 2,32,824 representing 4/6ths share of the lineal descendants of the deceased Sadhu Ram to the principal value of his estate for rate purposes in accordance with Section 34(1)(c) of the Act. The assessment framed was on the principal value of the estate left by Sadhu Ram, excluding the share of his lineal descendants and the widow. The share of the lineal descendants was considered only for rate purposes. An appeal against that order was dismissed by the first appellate authority. The accountable person then filed an appeal before the Tribunal. Before the Tribunal an additional ground was sought to be raised challenging the vires of Section 54(1)(c) of the Act being unconstitutional in view of the decision in V. Devaki Ammal's case : [1973]91ITR24(Mad) . The learned Tribunal did not entertain that ground of appeal for the reason that the constitutional validity of any provision of the Act could not be challenged in proceedings before the authorities constituted under it. The appeal was dismissed. Instead of filing an application for reference of the questions of law arising from the order of the Tribunal to the High Court for decision, the accountable person filed a civil writ petition on the ground that the constitutional validity of Section 34(1)(c) could only be challenged by way of writ petition and not in reference proceedings for the same reason as was given by the Tribunal. This court disagreed with the view expressed by the Madras High Court in V. Devaki Ammal's case : [1973]91ITR24(Mad) , and upheld the vires of Section 34(1)(c) of the Act. It was held that the value of the share of the lineal descendants of Sadhu Ram could be aggregated with the other estate of the deceased for the purposes of determining the rate of estate duty. The writ petition was ordered to be dismissed by observing as under (page 557) :
'For the reasons given above, there is no merit in this petition which is dismissed. The parties are, however, left to bear their own costs. The dismissal of this petition is on the basis that the assessment has been made in accordance with Section 34 of the Act, that is, the value of the shares of the lineal descendants of Sadhu Ram was aggregated with the other estate of the deceased for the purpose of determining the rate of estate duty only and that no estate duty has been levied thereon and that the estate duty has been levied on the estate which passed or was deemed to pass on the death of Sadhu Ram. If the order of assessment is not in accordance with this rule, it shall have to be revised so as to bring it in accord therewith.'
8. The above noted observations clearly show that the share of the lineal descendants could be aggregated with the other estate of the deceased for the purposes of determining the rate of estate duty. Thus, the Tribunal erred in holding that the judgment of the jurisdictional High Court in Hari Ram's case , was not applicable to the facts of the present case.
9. Against the judgment of the Madras High Court in V. Devaki Ammal's case : [1973]91ITR24(Mad) , an appeal was carried to the Supreme Court, which has been decided and the judgment is reported in Asst CED v. V. Devaki Ammal : [1995]212ITR395(SC) . The judgment of the Madras High Court was reversed and the view taken by this court and other High Courts upholding the vires of Section 34(1)(c) of the Act was affirmed.
10. Accordingly, it is held that the share of three lineal descendants could be aggregated with the share of the deceased for rate purposes.
11. For the reasons stated above, the question referred to us is answered in the negative, i.e., against the assessee and in favour of the Revenue.