Asstt. Collector Of Estate Duty  vs V. Devaki Ammal, Madras (1994) SCC 573

Asstt. Collector Of Estate Duty  vs V. Devaki Ammal, Madras (1994) SCC 573

FACTS OF THE CASE

The petitioner is the widow of P. S. Venkatesa Pillai, also known as the dead, who passed away intestate on December 2, 1966. He is survived by his widow, a young son named Mohanasundaram, and an unmarried daughter named Gajabai. He and his younger son made up the karta of an undivided Hindu household. In addition to agricultural estates in Peruganavoor village, Penned Taluk, and immovable properties in Madras, the family also owned movable assets such as cash in current accounts, recurring deposits, compulsive deposits, etc. If the family’s assets were divided while the dead was still alive, he would have received a half share as a co-owner. However, there was no such division.

The petitioner as an accountable person submitted a return of estate duty declaring the principal value of the share of the deceased in the joint family properties at Rs. 74,884. The Assistant Controller of Estate Duty, the respondent herein, however, determined the value of the property passing on the death of the deceased at Rs. 1,24,859 as against the value returned, after adjusting the funeral and other expenses which are permissible deductions under the Act. He, however, added a sum of Rs. 1,26,067 being the lineal descendant’s share, namely, the share of the minor son in the family properties to the value of the share of the deceased in accordance with the provisions of Section 34(1)(c) of the Estate Duty Act, 1953, hereinafter called the Act, and determined the principal value of the estate at Rs. 2,50,926.

ISSUES

1. Whether the Section 34(1)(c) is violative of section 14 of India Constitution ?
2. Does the Petitioner have a locus standi to file a suit in supreme court? 

ARGUMENTS 

According to Section 39(1), the benefit that accrues or results from the cessation of a coparcenary interest in any joint family property governed by the Mitakshara school of Hindu law that ceases upon the death of a member thereof shall be the principal value of the share in the joint family property that would have been allotted to the deceased had there been a partition immediately prior to his death. The Marumakkattayam and Aliyasantana families are covered by analogous provisions in Section 39(2)..

The constitutionality of the section must be upheld if Section 34(1)(c) is interpreted as a provision for the aggregation of the benefits accrued to each of the lineal descendants upon the death of the deceased. In fact, the learned attorney for the petitioner requested that we interpret Section 34(1)(c) in the same way and dismiss the respondent’s ruling on the grounds that Section 34(1)(c) does not permit the clubbing of the son’s share with the deceased in this case. 

It was argued on behalf of the Revenue that Section 34(1)(c) did not violate Article 14 and reference was made to the Madras High Court’s earlier decision in the PL S. RM. Sivaswamy Chettiar and I judgements of the various High Courts stated above. Additionally, it was argued that a consistent view of the law should be upheld given that we were dealing with a provision in a taxing statute that had been affirmed by numerous High Courts over a lengthy period of time.

In actuality, such discrimination is avoided by section 34(1)(c). Consider a joint Hindu family with two brothers that is regulated by the Mitakshara rule. If one of the brothers passes away, the other leaves behind two sons. Each of the sons would have been able to demand that the rate applied to the value of the benefit accrued to him would be a mat corresponding to such value if it weren’t for section 34 (1) (c). However, in light of section 34 (1) (c), the benefit accruing to each of the two sons would be valued separately, and the benefit accruing to one of the boys would be valued at the rate applicable to the aggregated value as determined under section 39.

JUDGEMENT

In the case of a joint Hindu family governed by Mitakshara law the sons have, from birth, an interest along with their father in its property. This is true also of Marumakkattayam and Alivasantana cases from a class apart and the the Legislature is entitled to provide, as it has done in Section 7, that in such case the property in which the deceased or any other person had any interest ceasing on his death shall be deemed to pass on the death to the extent to which a benefit accrued or arose by the cesser of such interest. 

In the case of a member of a Davabhaga family dying, no question of aggregation can arise at all for the member of such a family dying possessed by reason of his personal law a defined share in the assets of the family, unlike deceased member belonging to a joint Hindu family governed by the Mitakshara law. It is precisely for that reason that in the case of a member belonging to a joint Hindu family governed by the Mitakshara law dying the principle of aggregation has been embodied in section 34(1)(c). But for the principle of aggregation, the rate applicable to such a case will be the rate corresponding to the value of the benefit that can be regarded as having accrued to each of the lineal descendants of the deceased. Whereas, in the case of a Dayabhaga family, in view of the fact that the share of the deceased member is a is a crystallised one, the rate applicable in that case would be a rate corresponding to the value of the share of the deceased member. It may be seen, therefore, that but for the principle of aggregation envisaged by section 34(1)(c), there would be discrimination.

We find no substance in this contention. Section 34 sets out at one place in the statutes cases in which aggregation is to be made. That aggregation is to be made in respect of the properties which fall under clause (a) and (b) which pass on death, and also in respect of property under clauses (c), which is deemed to pass on death, does not lead to the conclusion that unequals are treated equally.

It would follow, therefore, that there is no discrimination whatever brought about by section 34 (1) (c) between members of a Mitakshara joint Hindu family and of a Dayabhaga family in the matter of application of rates of taxation.

We see, therefore, no merit in the contention that Section 34(1)(c) is violative of Article 14 or that it is unconstitional on that account. The appeal (Civil appeal No.71 of 1975) is allowed. The judgment and order under appeal is set aside. the respondent shall pay to the appellant the costs of the appeal fixed at Rs.10,000/-.

REFERENCES

https://indiankanoon.org

https://ww.scconline.com

This case analysis is written by Aditi Shakya of Institute of Law, Jiwaji University Gwalior ⁷th sem, Intern at Legal Vidhiya.

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