Judgment:
V.V. Kamat, J.
1. We have to consider and answer the following question ;
'Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the value of the closing stock of the firm, Popular Automobiles, was to be enhanced to the extent of the market price obtainable in retail sales ?'
2. There is no dispute with regard to the basic position that for the purposes of levy of estate duty under the Estate Duty Act, 1953, the value is to be determined, in the opinion of the Controller on the basis of what it would fetch if sold in the open market at the time of the deceased's death.
3. The question itself would make it clear that we are concerned with the process of valuation of the closing stock on the death of Shri K. P. Chackunny, who expired on February 25, 1968, in regard to payment of estate duty on the above count by his widow, Smt. Mary Chacko.
4. The valuation of the closing stock is with regard to the firm--Messrs. Popular Automobiles. It is a firm purchasing goods from different concerns in large quantities from the distributors in common parlance and so the firm is getting special discount and there is no dispute that this special discount is 12.5 per cent.
5. The Assistant Controller of Estate Duty, Trichur, has not travelled far and wide in any sense of the situation but has added this amount of special discount at 12.5 per cent, to the closing stock shown by the accountable person in the estate duty return and arithmetically proceeded further to determine l/5th share in regard thereto.
6. Thus, the factual matrix is beyond all pales of controversy. It is as follows :
'The firm is valuing its closing stock at cost. For estate duty purpose the market value of the assets as on the date of death is to be considered and as such the profit element involved in the closing stock is to be added to arrive at the market rate. The accountable person has objected to this valuation on the ground that the commodities in which the firm is dealing have a dealer's price and a retail price and the firm's stock worth Rs. 13,41,238. If sold in the open market the buyers will be only dealers and the price they would fetch if sold in the open market would be the dealer's price, which is really the price at which the goods are valued by the firm for the purpose of closing its annual accounts. Incidentally it may be stated here that the firm, Popular Automobiles, is purchasing goods from different concerns in large quantities and so the firm is getting special discount on the purchase and as such the cost of purchase would be less than the dealer's price prevailing in the open market. Further, the principal value of any property shall be estimated as per Section 36 of the Estate Duty Act which stipulates that it should be the price, which in the opinion of the Controller, it would fetch if sold in the open market at the time of the deceased's death. Sub-section (2) of Section 36 restricts that no reduction shall be made in the estimate on the assumption that the whole property is to be placed on the market at one and the same time. The fact that the firm is making 12 1/2 per cent. profits on its sales goes to show without saying that the stock value is less by 12 1/2 per cent. than the selling price and as such to arrive at the market price the profit element will have to be included in the value of stock disclosed. It is immaterial whether the firm sells the goods to dealers or consumers. What is material is generally how much percentage of profit is earned by the firm on its sales, which is 12 1/2 per cent. and the accountable person has no dispute over it. Hence, the value of closing stock is increased by 12 1/2 per cent. and the deceased's l/5th share added . . . Rs. 33,531.'
7. It would be apparent that whatever may be the situation, the assessing authority--Assistant Controller of Estate Duty, has considered only one aspect of special discount to observe that the cost of purchase is bound to be less than the dealer's price prevailing in the market. He has not chosen to consider any other aspect as required in the statutory provision of Section 36 of the Estate Duty Act, 1953. This is abundantly clear and there is no dispute in regard thereto. In spite of this position, reading the subsequent two decisions of the appellate authorities there is a travel far and wide in the directions all around only to lose sight of the essentials or to get the judicial vision clouded. Rival sides have placed decisions before the authorities at its own concurrent levels.
8. When this undisputed and uncontroverted factual position was put to learned counsel for the assessee it is natural that she was in difficulties in view of the fact that this undisputed limited approach, could not be controverted much less in the present proceedings for answer to the question. In our judgment fixation and valuation in the matter of closing stock is approached from the point of view of uncontroverted and undisputed position of the special discount which is 12 1/2 per cent. in any situation. It is a situation dealing with the undisputed factual conclusion.
9. For the above reasons, we find that the question has to be answered in the affirmative--against the accountable person and in favour of the Revenue.
10. A copy of the judgment under the seal of this court and the signature of the Registrar shall be sent to the Income-tax Appellate Tribunal, Cochin Bench, for passing consequential orders.