Ashok Bhan, J.
1. The following question of law has been referred to this court by the Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh, for its opinion :
'Whether the Appellate Tribunal legally erred in holding that if an exemption is available to a Hindu joint family in respect of a residential house, its value being less than Rs. 1 lakh, no valuation in respect of the same could be brought in the estate of the deceased HUF either for tax or aggregation and thereby vacating the addition of Rs. 27,625 added for determining the rate of estate duty payable on the taxable estate ?'
2. Barkat Ram Khanna died in July, 1976. In response to a notice issued under Section 58(2) of the Estate Duty Act, 1953 (hereinafter referred to as 'the Act'), his son, Kismat Rai Khanna, being the accountable person, filed the estate duty return showing the principal value of the estate at Rs. 1,39,198. A Hindu undivided family of Barkat Ram Khanna owned half share in the self-occupied residential property. The other half belonged to Piare Lal, brother of Barkat Ram Khanna. The value of such house was shown at Rs, 35,153. The accountable person's case before the Assistant Controller of Estate Duty was that since the value of the residential house was below Rs. 1 lakh, it was totally exempt from the payment of estate duty and no part of it could be aggregated with the taxable estate. The Assistant Controller, however, determined the half share of the deceased in the HUF at Rs. 55,250 instead of Rs. 35,153, which had been shown in the return. The Assistant Controller allowed exemption under Section 33(1)(n) of the Act in respect of the half share representing the deceased's share in the HUF and added the half share, i.e., Rs. 27,625, of the lineal descendants under Section 34(1)(c) of the Act for aggregation purposes.
3. The accountable person filed an appeal before the Appellate Controller of Estate Duty and contended that no addition could be made for rate purposes on account of the HUF residential house as its value was less than Rs. 1 lakh. The appeal was accepted by the first appellate authority, who deleted the addition of Rs. 27,625 made in the estate for aggregation purposes. It was held that the value declared of the house was less than Rs. 1 lakh and the same was enhanced to Rs. 1,10,500 (value of the total house) without any basis by the Assistant Controller.
4. The Revenue filed an appeal before the Tribunal but the same was dismissed. It was held by the Tribunal that if an exemption is available to the Hindu joint family in respect of a residential house, its value being less than Rs. 1 lakh, no valuation in respect of the same could be brought in the estate either for the purposes of tax or aggregation. The accountable person contested the valuation adopted but the Tribunal did not consider it necessary to go into that aspect because of its decision on the legal issue which resulted in deletion of the addition of Rs. 27,625 made for aggregation purposes under Section 34 of the Act. The Tribunal noticed the difference of opinion between the Karnataka High Court in CED v. K. Nataraja : [1979]119ITR769(KAR) and the Andhra Pradesh High Court in CED v. Estate of Late Durga Prasad Beharilal : [1979]116ITR692(AP) and adopted the view taken by the Andhra Pradesh High Court in Estate of Late Durga Prasad Beharilal's case : [1979]116ITR692(AP) , which was in favour of the assessee.
5. On a petition filed under Section 64(1) of the Act, the question of law reproduced in the earlier part of the judgment has been referred to this court, for its opinion.
6. Sections 33(1)(n) and 34(1) of the Act, which are the relevant provisions of the statute, are reproduced below :
'Section 33. Exemptions.--(1). . .
(n) 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 ;. . .' 'Section 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,--
(a) all property so passing other than property exempted from estate duty under Clauses (c), (d), (e), (i), (j), (1), (m), (mm), (n), (o) and (p) of Sub-section (1) of Section 33 ; and . . .
(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. . .'
7. The question for determination is as to whether the share of the lineal descendants in the HUF could be taken into consideration for aggregation purposes under Section 34(1)(c) of the Act, of the property which was exempted from estate duty under Section 33(1)(n) of the Act.
8. The Andhra Pradesh High Court in Estate of Late Durga Prasad Behar-ilal's case : [1979]116ITR692(AP) took the view that it could not be done. It was held (headnote) :
'. . . that the deceased had only 1/5th share in the undivided residential house which was exempt under Section 33(1)(n) and value of the balance 4/5ths share of the house property cannot be taken into consideration for the purpose of determination of the net principal value of the estate of the deceased inasmuch as the said 4/5ths share belonged to other coparceners. Therefore, the value of the entire house is liable to be excluded from the net principal value of the estate.'
9. The same view was taken by the Andhra Pradesh High Court in K. Venugopal v. CED [19831 143 ITR 988 ,
10. The Madras High Court in CED v. D. Rajasekaran Kamak : [1984]147ITR769(Mad) also took the same view.
11. As against this, the Karanataka High Court in K. Nataraja's case : [1979]119ITR769(KAR) , the Allahabad High Court in Income-tax Appellate Tribunal v. Madan Mohan : [1979]119ITR781(All) , the Madhya Pradesh High Court in Smt Gunvantibai v. CED : [1981]130ITR122(MP) , CED v. R. S, Gwalre : [1981]130ITR261(MP) and Shyamsukh Garg v. CED : [1984]145ITR238(MP) , the Patna High Court in CED v. P K. Agarwalla : [1988]169ITR699(Patna) and Krishna Mohan Prasad Sah v. CIT : [1995]213ITR537(Patna) , the Rajasthan High Court in CED v. Smt. Nirmala Saxena [1995] 214 ITR 566 and CED v. S. S. Mehta [1995] 214 ITR 648 and the Gujarat High Court in Gunvantlal Kes-havlal v. CED : [1982]134ITR533(Guj) took the contrary view.
12. In K. Nataraja's case : [1979]119ITR769(KAR) E. S. Venkataramaiah J. (as his Lordship then was), speaking for the Bench specifically differed with the view expressed by the Andhra Pradesh High Court in Estate of Late Durga Prasad Beharilal's case : [1979]116ITR692(AP) . It was held that where the residential house belongs to a HUF governed by the Mitak-shara law, only the share of the deceased in such house is exempt from estate duty under Section 33(1)(n) and for the purpose of determining the rate of estate duty the value of the share of the deceased in such house has to be excluded from the value of the property passing on his death under Section 34(1)(a), but the value of the shares of all the lineal descendants of the deceased in the coparcenary property including the residential house has to be aggregated under Section 34(1)(c) without any reference to any exemption under Section 33(1)(n) of the Act.
13. The Allahabad High Court in Madan Mohan's case : [1979]119ITR781(All) has also taken the same view.
14. The Madhya Pradesh High Court in R. S. Gwalre's case : [1981]130ITR261(MP) has also taken the same view. G. P. Singh, C. J. (as his Lordship then was), speaking for the Bench, dealt with the point in issue exhaustively and held (page 264) :
'A perusal of Section 33(1)(n) will go to show that the exemption under that provision is not in respect of the whole house but only to the extent it belongs to the deceased and passes on his death. It is true that Clause (n) refers to 'one house or part thereof but the opening words of Section 33(1) clearly limit the exemption to the property belonging to the deceased which passes on his death. Now, in the case of a house belonging to an HUF, the house cannot be said to belong wholly to a member and, therefore, if a member of such a family dies, the exemption under Section 33(l)(n) cannot operate for the entire house but will be limited to the extent of the interest held by the deceased member in the house. The interest of the lineal descendants of the deceased member in the house does not belong to the deceased and cannot be said to pass on his death and, therefore, such an interest does not qualify for any exemption under Section 33(1)(n). Section 34 permits aggregation of the interest in the joint family property of all the lineal descendants of the deceased for rate purposes. This is clear by a reading of Section 34(1)(c) and Section 34(2). But Section 34 nowhere provides that in making the aggregation of the interest in the joint family property of the lineal descendants the aggregation would not cover such property of the descendants which would have qualified for exemption had any one of them died. There is no room for applying the provisions dealing with exemption at the stage of aggregation of the interest in the joint family property of the lineal descendants. Section 39(1) provides for the mode of valuation of interest in coparcenary property which ceases on the death of a member. This interest is to be valued by determining the principal value of the share in the joint family property which would have been allotted to the deceased had there been a partition immediately before his death. Section 39(3) on which great reliance has been placed by the accountable person provides that for the purpose of estimating the principal value of the joint family property of a Hindu family governed by the Mitakshara 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. Now, Section 39(3) creates a fiction for the purpose of estimating the principal value of the joint family property of a Hindu family. The fiction is that the joint family property is deemed to be the property of the deceased and the provisions of the Act are to apply on that basis but this fiction is 'for the purpose of estimating the principal value' and not for any other purpose. The application of the provisions of the Act by the fiction is only for the purpose for which the fiction is created, i.e., for the purpose of estimating the principal value of the joint family property. For example, Section 36 provides that the principal value of any property shall be estimated to be the price which in the opinion of the Controller it would fetch if sold in open market at the time of the deceased's death. This provision of the Act would be applied because of the fiction 'for the purpose of estimating the principal value of the joint family property'. Similarly, if the joint family held shares in a private company, Section 37 would be applied. The fiction, however, cannot be used to widen the exemptions contained in Section 33 of the Act in determining the principal value of the joint family property under Section 39(3). The principal value of the joint family property has first to be determined by ignoring Section 33. The next stage is the determination of the principal value of the share which would have been allotted to the deceased, had a partition taken place immediately before his death. After determining the principal value of the share of the deceased in the joint family property, exemption of the value of his interest in the residential house of the family has to be allowed under Section 33(l)(n). Thereafter, the value of the interest in the joint family property of all the lineal descendants of the deceased is to be added to the principal value of the interest of the deceased minus the exemption allowed to him under Section 33(1)(n). It is on this aggregate amount that the rate of estate duty is to be applied subject to this that the inclusion of the value of the interest of the lineal descendants in the joint family property is merely for rate purposes as is clear from Section 34(2). In our opinion, the Tribunal was wrong in applying the fiction contained in Section 39(3) to extend the exemption under Section 33(1)(n) so as to cover the value of the interest of the lineal descendants in the residential house.'
15. The Bench specifically disagreed with the view expressed by the And-hra Pradesh High Court in Estate of Late Durga Prasad Beharilal's case : [1979]116ITR692(AP) and agreed with the view expressed by the Karnataka High Court in K. Nataraja's case : [1979]119ITR769(KAR) and the Allahabad High Court in Madan Mohan's case : [1979]119ITR781(All) .
16. Similar is the view expressed by the other High Courts referred to above in Smt. Gunvantibai's case : [1981]130ITR122(MP) , Shyamsukh. Gary's case : [1984]145ITR238(MP) , P. K. Agarwalla's case : [1988]169ITR699(Patna) , Krishna Mohan Prasad Sah's case : [1995]213ITR537(Patna) , Smt. Nirmala Saxena's case [1995] 214 ITR 566 , S. S. Mehta's case [1995] 214 ITR 648 and Gunvantlal Keshavlal's case : [1982]134ITR533(Guj) . We need not refer to all these judgments as the line of reasoning was the same as was adopted by the Karnataka High Court in K. Nataraja's case : [1979]119ITR769(KAR) and the Madhya Pradesh High Court in R. S. Gwalre's case : [1981]130ITR261(MP) .
17. We cannot persuade ourselves to take the view which has been expressed by the Andhra Pradesh High Court in Estate of Late Durga Prasad Beharilal's case : [1979]116ITR692(AP) and K. Venugopal v. CED : [1983]143ITR988(AP) and the Madras High Court in D, Rajaseka-ran Kamak's case : [1984]147ITR769(Mad) . We respectfully disagree with that view.
18. We entirely agree with the view expressed by the Karnataka High Court in K. Nataraja's case : [1979]119ITR769(KAR) , the Allahabad High Court in Madan Mohan's case : [1979]119ITR781(All) , the Madhya Pradesh High Court in Smt. Gunvantibai's case : [1981]130ITR122(MP) , R. S. Gwalre's case : [1981]130ITR261(MP) and Shyamsukh Garg's case : [1984]145ITR238(MP) , the Patna High Court in P. K. Agarwalla's case : [1988]169ITR699(Patna) and Krishna Mohan Prasad Sah's case : [1995]213ITR537(Patna) , the Rajasthan High Court in Smt Nirmala Saxena's case [1995] 214 ITR 566 and S. S. Mehta's case [1995] 214 ITR 648 (Raj) and the Gujarat High Court in Gunvantlal Keshavlal's case : [1982]134ITR533(Guj) . We adopt the reasoning given by these courts and especially the view expressed by G.P. Singh, Chief Justice (as he then was) in R. S. Gwalre's case : [1981]130ITR261(MP) reproduced in extenso.
19. For the reasons stated above, we answer the question referred to us in the affirmative, i.e, in favour of the Revenue and against the assessee. It is held that the Tribunal has erred in holding that the valuation in respect of a residential house which was exempt from duty under Section 34(1)(c) of the Act could not be brought in the estate of the deceased HUF for aggregation purposes, which had been added for determining the rate of estate duty payable on the taxable estate. No costs.