Allahabad H.C : Whether, on the facts and in the circumstances of the case, only 27/60 share of the lineal descendants was includible in the principal value of the estate left by the deceased or 3/5ths of share as was included by the Asstt. CED ?

K. C. AGRAWAL, J.:

At the instance of the Revenue, the following question has been referred to the High Court for its opinion : “Whether, on the facts and in the circumstances of the case, only 27/60 share of the lineal descendants was includible in the principal value of the estate left by the deceased or 3/5ths of share as was included by the Asstt. CED ? “In order to appreciate the background in which the aforesaid question had been raised, we may give the family pedigree and interest in the joint family property of the lineal descendants of the deceased, Bhakt Sajjan Krishna, who died on 3rd Aug., 1979, as follows: Pedigree Table given below: Bhakt Sajjan Krishna Satya Mohan Pushpa Shaeel Uma Rani Dharam Sushma Agrawal Agrawal Mohan Mohan Agarwal Anupam (S) Priti (D) Agrawal . . Rupam(S) Poonam(S) Pankaj(S) Piyus(S) . . Reetu(S) Gagan(S) Gaurav(S) Per Asstt. CED . Per accountable . . person Bhakt Sajjan 1/5 Bhakt Sajjan . 1/5 . . *Krishna Kumari (W) . 1/5 *Krishna (W) 1/5 Satya Mohan 1/15 (do.) . . . Pushpa (w) 1/15 (do.) . Satya Mohan 1/5 Anupam 1/15 (do.) . . . Sheel Mohan 1/30 (do.) . Sheel Mohan 1/5 Umarani (W) 1/30 (do.) . . . Rupam 1/30 (do.) . Dharam Mohan 1/5 Poonam 1/30 (do.) . .

.Pankaj 1/30 (do.) . . . Piyus 1/30 (do.) . . . Dharam Mohan 1/20 1/4th . of 1/5 . . Sushmarani 1/20 (do.) . . . Gagan 1/20 (do.)Gaurav 1/20 (do.) . Aggregation 1/5+1/5+1+5 1/15+1/15+1/30+1/30+1/30+1/30+1/30+1/20+1/20+1/20 for rate =3/5 =27/60

The case of the accountable person was that for determining the shares of the lineal descendants, a deemed partition under s. 39(1) of the ED Act, 1953 (“the Act”), had to be contemplated not only amongst the deceased, his wife and his three sons, but also amongst the sons of the sons of the deceased and wives of the sons of the deceased. The contention was that if all the shares were worked out on the aforesaid basis, the share of the lineal descendants which could be taken into account for the purpose of rate would come to 27/60.

The Asstt. CED did not accept the contention of the accountable person and holding the same to be at 3/5ths, as against 27/60, determined the principal value of the estate of the deceased for rate purposes.

In appeal, the judgment of the Asstt. CED on the point aforesaid was reversed and 27/60, as the share of the lineal descendants was included while determining the principal value of the estate of the deceased. In second appeal, the Tribunal took the same view holding that 27/60 and not 3/5ths was includible for rate purposes under s. 34(1)(c) of the Act. It was thereafter on the reference application made by the Revenue that this case has come to this Court. Sec. 34 lays down that for the purposes of determining the estate duty payable on the estate of the deceased, all the property passing or which is deemed to pass on the death of the deceased shall be aggregated so as to form one single estate and duty shall be payable at the proper graduated rate given in the First Schedule on the principal value determined in accordance with s. 35 of the Act. The relevant clause of s. 34(1), with which we are concerned, is cl. (c). It is quoted below : “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 interest 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.” Under the aforesaid section, interest in the joint family property of all the lineal descendants of the deceased shall be aggregated with the property passing on the death of the deceased so as to form one estate.

The question raised by the assessee-accountable person was that the expression “lineal descendants” shall take within itself not only the sons but the grandsons as well. It was on this basis that the shares of the sons and grandsons were worked out at 27/60. The case of the Revenue to the contrary is that within this expression, only the sons would be considered as lineal descendants and not the grandsons. Reference to s. 39 would also be relevant which lays down the method of calculating the value of interest in the coparcenary property ceasing on the death of any member of a coparcenary. From sub-s. (1), it is clear that the value of the benefit accruing or arising from the cesser of a coparcenary interest of a Hindu governed by the Mitakshara school for the purposes of taxation shall be of the principal value which would have been allotted to the deceased had there been a partition immediately before his death. Sub-s. (3) provided that for the purpose of determining 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 joint family property had belonged to the deceased. This provision is on the line of Expln. I to the proviso to s. 6 of the Hindu Succession Act, 1956. This Explanation reads : “For the purposes of this section, the interest of a Hindu Mitakshara coparcener shall be deemed to be the share in the property that would have been allotted to him if a partition of the property had taken place immediately before his death, irrespective of whether he was entitled to claim partition or not.” Sub-ss. (1) and (3) of s. 39 create a fiction about the deemed partition. It is a settled rule of interpretation of a fiction that the Court should ascertain for what purpose the fiction is created and after ascertaining the purpose, the Court has to assume all facts which are incidental to the giving effect to that fiction. It will not be given a wider meaning than what it purports to do. As to how a fiction should be interpreted has been laid down in several decisions by the Supreme Court. One of them is Consolidated Coffee Ltd. vs. Coffee Board (1980) 46 STC 164, 174 (SC); (1980) TLR 1723, 1734. It was said that : “A deeming provision might be made to include what is obvious or what is uncertain or to impose for the purpose of a statute an artificial construction of a word or phrase that would not otherwise prevail, but in each case it would be a question as to with what object the Legislature has made such a deeming provision”.

Coming to s. 34(1)(c) as stated earlier the argument of the petitioner’s counsel was that not only shall a partition be deemed to have taken place between the deceased, Bhakt Sajjan, and his sons, in which each one of them excluding his widow would get 3/5th being 1/5th to each of them but also the shares of the grandsons had to be worked out and if those shares were worked out, the interest in the joint family property of all the lineal descendants would be 27/60.

In that situation, the rate applicable for payment of estate duty under s. 35 would be less than what it would be in case 3/5th is found to be the share of the lineal descendants liable to be aggregated. For the proposition, the petitioner placed reliance on a judgment of the Division Bench in Satyanarayan Saraf v Asstt. CED 1977 CTR (Cal) 22 : (1978) 111 ITR 432 (Cal). In that case, Hanuman Prasad died leaving behind his widow, his son, Satya Narain, and his grandson, Bhagwati Prasad. Satya Narain, his son and his daughter constituted the smaller-HUF. The Calcutta High Court held that the shares of the lineal descendants which were to be aggregated with the share of the deceased in the joint family were 1/9th + 1/9th = 2/9ths. This decision undoubtedly supports the contention of the assessee. But, with the greatest respect, we have found ourselves unable to subscribe to the view taken therein inasmuch as, in our opinion, the expression “lineal descendants” used in cl. (c) of sub-s. (1) of s. 34 will not take within its compass the grandsons whose fathers were alive. Mulla, in his fifteenth edition of Hindu Law, at page 444, paragraph 323, deals with partition by father during his lifetime. He says that the father of a joint family has the power to divide the family property at any moment during his lifetime, provided he gives his sons equal shares with himself. But, a grandfather has no power to bring about separation amongst his grandsons. It is this principle which has to be kept in view while interpreting cl. (c) of sub-s. (1) of s. 34. We have already noted above the purpose of cl. (c) of s. 34(1). In Badri Vishal Tandon vs. Asst. CED 1975 CTR (All) 144 : (1976) 103 ITR 468 (All), the objects of s. 34 have been dealt with exhaustively. Two out of them, which are relevant for our purposes are : to remove disparity in the incidence of estate duty on the estates of persons belonging to those governed by the Mitakshara, on the one hand and those governed by Dayabhaga, which does not recognise acquisition of interest by birth, on the other, and to remove unequal distribution of wealth.

It may be noted here that s. 34(1)(c) does not levy any duty on the estate of the deceased. It enables aggregation of the interest of the male lineal descendants for the purposes of determining the rate at which estate duty is leviable on the principal value of the interest of the deceased. No estate duty is leviable on the interest of the male lineal descendants. It only provides the machinery for determining the rate. To us it appears that the objects of s. 34 would be achieved if the expression “lineal descendants” is understood in the sense which we have expressed above.

Learned counsel for the Revenue rightly submitted that s. 39(1) contemplates a deeming provision for partition in the joint family property immediately before the death of the deceased between the deceased and his lineal descendants which would include in the context of things only the sons and not grandsons.

For what we have said above, we hold that 3/5th was includible in the principal value of the estate left by the deceased for the purposes of s. 34.

No order as to costs.

[Citation : 173 ITR 561]