Income Tax Appellate Tribunal - Hyderabad
Smt. Zubeda Begum vs Assistant Controller Of Estate Duty. on 16 January, 1990
Equivalent citations: [1990]33ITD609(HYD)
ORDER
Per Shri T. V. Rajagopala Rao, (Judicial Member) - The first is an appeal filed by the accountable person and the second is an appeal filed by the department. The deceased is common in both these appeals and these appeals relate to the estate duty assessment of the deceased. The appeal filed by the accountable person consisted of four grounds whereas that of the department consist of two grounds. The two grounds in the departmental appeal and the first two grounds in the appeal filed by the accountable person are one and the same. Hence for the sake of convenience, these two appeals can be taken up together and disposed of by a common order.
2. Shri Md. Rahman of Ongole died intestate on 30-11-1984 leaving behind widow, three sons and two daughters. Smt. Zubeda Begum, the appellant in EDA No. 2/Hyd/88 is widow of Shri Mohd. Rahman. Md. Shahul Hameed, Md. Shakeer Hameed and Md. Zakeer Hameed are the three sons and Md. Zareena Begum and Md. Roofia Nazma Begum are the two daughters of the late Sri Md. Rehman. In the property left behind by the deceased late Md. Rehman, admittedly, his widow had got 1/8 share, each of his son got 14/27th share and each of his daughters 7/48th share.
Though the accountable person admitted the total value of the movable and immovable properties of the deceased at Rs. 11,13,936 the value of dutiable estate was returned only at Rs. 7,89,037. The value of the shares of the two daughters of late Shri Md. Rehman in the total value of estate given at Rs. 3,24,898 according to the accountable person does not pass on the death of the deceased. The first daughter Smt. Md. Zareena Begum was married on 25-11-1984 i. e. 4 days before the death of the deceased. The second daughter Md. Roofia Nazma Begum remained unmarried at the time of the death of her father. The following reasons were given in the account filed by the accountable person for not including the value of the share of the two daughters inherited in their fathers estate :
"The deceased got 3 sons. Thus each son got 14/27th share. The deceased got two daughters. Thus each got 7/48th share. The marriage of the deceaseds eldest was held on 25-11-1984 in the absence of deceased since the deceased was at that time in Appolo Hospital, Madras. He died on 30-11-1984. Hence her share if 7/48th share, i. e. Rs. 1,62,448.85P is claimed as an admissible deduction. The accountable person has to perform in the future, the marriage of the deceaseds second daughter. Hence her share i. e., Rs. 1,62,448.85P is claimed as an admissible deduction... Total deduction of Rs. 3,24,897.70P is claimed as per Muslim Law (Sunnies) because the deceaseds daughters got right and interest in the property of the deceased which do not pass on the death of the deceased and therefore not chargeable to estate duty u/s. 5 of the Act. The deceaseds sons share and interest in the property are included for rate purpose. It does not pass on the death of the deceased. The deceased died intestate. Estate duty cannot be levied on the property has does not pass on the death of the deceased. The share and interest of the sons of the deceased amounting to Rs. 6,49,795.41P is aggregated for rate purpose only and proportionate duty rebate is claimed thereon which work to 124,140 at an average rate of 0.191043."
Thus according to the accountable person the daughters share to be excluded hence the value of their shares according to her, do not pass on the death of the deceased and do not partake the nature of dutiable estate. So also it is the claim of the accountable person that since the son have got right by birth under Muslim law their share are aggregated only for the rate purposes and she is entitled to duty rebate of Rs. 1,24,140.
4. The Asst. Controller of Estate Duty by his assessment dated 29-1-1987 worked but the net principal value of the estate of the deceased at Rs. 12,85,170. While doing so, he refused to give deduction of Rs. 3,24,898 representing the value of share of the two daughters. He also refused to give rebate of Rs. 1,24,140 on the value of the shares of deceaseds sons.
5. The accountable person having been aggrieved by the assessment framed against her appeal to the Appellate Controller of Estate Duty. The Appellate Controller by his impugned order dated 28-3-1988 held that out of Rs. 3,24,898 representing the value of the inherited estate of the two daughters Rs. 80,000 is allowed as deduction awards the marriage expenses of the two unmarried daughters. Further the learned Appellate Controller erroneously understood the refusal to consider Rs. 1,24,040 as rebate on sons share as a refusal to give deduction, in the computation of the value of the estate of the deceased, and ultimately held in his impugned order that out of Rs. 1,24,040, Rs. 30,000 should be allowed as a deduction towards the maintenance allowance of the minor son who is her third son.
6. The only two grounds in the departmental appeal are directed towards challenging the allowance of Rs. 80,000 on account of marriage expenses of the two daughters and Rs. 30,000 towards maintenance of minor son (3rd son) of the deceased and the direction to allow them as deductions. The first two grounds in the appeal filed by the accountable person are directed against the short deduction of Rs. 80,000 instead of Rs. 3,24,898 as also Rs. 30,000 instead of Rs. 1,24,040.
7. We have heard Shri M. K. Rao, the learned departmental representative and Smt. Prabha Jain for Sri M. J. Swamy, learned advocate for the accountable person. The learned departmental representative had filed before us a true copy of the estate duty account filed by the accountable person Smt. Zubeda Begum. The quotation given in the above paras in our order is nothing but a part of para (L) of the said estate duty account filed before the Department. The learned advocate for the accountable person filed a paper compilation. The questions which arise for our consideration as far as the disposal of these two grounds are concerned ar :
(i) What dose the term maintenance means under Muslim Law or Hanafi Law ?
(ii) Whether the maintenance under Muslim Law include incurring marriage expenses of unmarried daughters ?
(iii) What is the nature of duty of a Muslim towards providing maintenance to his minor sons and providing marriage expenses of his unmarried daughters ?
(iv) Whether the liability of a Muslim, if at all exists, is a personal liability or forms an automatic charge over his properties ?
(v) Whether sons and daughters are entitled to claim both a right at share as well as a right to maintenance including marriage expenses ?
(vi) If so, whether the claim for deduction of Rs. 3,24,898 and Rs. 1,24,040, made are sustainable and grant of Rs. 80,000 and Rs. 30,000 as deductions by the learned Appellate Controller are in order and are to be sustained ?
We have considered all above aspects with reference to Mullas Principles of Mahomedan Law, 18th Edition edited by former Chief Justice of India Shri M. Hidayatullah and we are of the view that the answer\s to each of the above questions has\have to be give in favour of the revenue and against the accountable person. In the above treatise in Chapter XIX at page 383, maintenance is defined, as including food, raiment and lodging. According to the learned authors, this is the definition of maintenance according to Muslim Law. According to the above definition, marriage expenses, in our understanding of Muslim Law are not included in the definition of the term maintenance. According to Mahomedan Law, marriage is a contract (Nikah) between the bridegroom and the bride and not a sacrament or a necessary Samskara as understood by Hindus. So we hold that a Mahomedan need not provide marriage expenses for the performance of his daughters marriage nor does it form part of their liability to maintain them. Assuming we are not correct on this point of law we are of the firm view that the liability of the father with regard to providing marriage expenses of daughters marriage, if any, exists under Muslim Law, it is only the personal liability of the father and it does not form an automatic charge on the property left by him after his death. In this appeal it is nobodys case that a claim for maintenance was made against the deceased during his lifetime on behalf of his unmarried daughter or any liability towards that obligation was undertaken by the deceases during his lifetime. In our considered opinion and heir of a Muslim has to look only to the share inherited by him or her in the property of the deceased for satisfying his or her maintenance claimed so long as in pursuance of. Such claim not charge over any property of the decease was created in a suit file and decreed against the decease. Mere claim for maintenance unless it is quantified under decree or such liability is undertaken by the deceased to be a debt cannot be considered either as a debt or an encumbrance within the meaning of section 44 of the Estate duty Act. A liability arises as soon as the death of the deceased occurs and it does not depend filing of account. U/s 74 of the Estate Duty Act, Estate Duty payable forms from the first charge on all the properties left behind by the deceased. Dr. V. Balasubramaniam in his law and practice of Estate duty (4th edition) at page 47 on the strength of the decision in Mr. Balanche Nathalia Pinto v. State of Mysore [1964] 53 ITR 64 (Mys.) stated the law as follows :
"The scheme of the Estate duty act and its provisions make it clear that immediately on the death of a person, Estate duty becomes exigible in respect of the property which passes on his death. The liability comes into being even before it passes and what brings into existence that liability is the death of the person to whom the property belongs. In that situation to whomsoever the property may pass, the property which so passes is the property on which the liability for the payment of the Estate duty had already become fastened."
According to the clear exposition of the law on the subject we are of the view that the contention of the accountable person having accepted that deceased died intestate and having accepted that he is a Mahomedan governed by Sunni Law that the share of the two daughters does not pass after the death of the deceased or that the sons have got that right by birth and having got right of partition and that their shares after the death of the deceased are only aggregable are only stated to be rejected. It is ludicrous to contend that a son inheriting would get that as right by birth or his share does not pass on the death of the deceased. There is no question of any joint family existing in Muslim Law. So even supposing the father and sons were Muslims living together, they cannot constitute themselves into a joint family. The right by birth is a peculiar features of Mitakshara Hindu Law and it is not available to Muslims. The question of aggregation is dealt with U/s. 34 of the Estate duty Act. Section 34 (1) (c) is as follows :
"34. (1) for the purpose of determining the rate of Estate duty to be paid on any property on the death of the deceased, -
(a) ................
(b) ................
(c) In the case of the property so passing which consist of a coparcenary interest in the joint family property of Hindu family governed by Mistakshara, Marumakattayam 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 there on at the rate or rates applicable in respect of the principle value thereof A reading of the above provision would clearly show that the said provision is applicable to Hindus only. A share inherited from the father on his death in the case of Mahomedan cannot be equated to an interest in the joint family property in the case of Hindus. As regards the claim of maintenance for the second daughter, we feel that the decision of the A. P. High Court in CED v. Smt. P. Leelavathamma [1978] 112 ITR 739 clearly applies. In that case also sole surviving coparcener of a Hindu undivided family dies leaving behind his mother, his widow and a daughter. The question which came up for decision before the High Court was whether the wife is entitled to the right of maintenance after the death of her husband, she having inherited a part of his estate. The A. P. High Court held that she is not entitled to any separate maintenance apart from her share. At 740 of the reported decision, the ratio of the A. P. High Court as per the head note is as follows :
"Held, (i) that the wife, being a heir of the deceased under section 8 of the Hindu Succession Act, is not entitled to separate maintenance after the death of the deceased under section 22(2) of the Hindu Adoption and Maintenance Act. She had no choate or clear right against any specific property of the deceased when he was alive in respect of her claim for maintenance and her right is only personal in nature. It is only after she files a suit and obtains a decree with a charge for her maintenance on a particular portion of the property, that the portion of the property which is charged can be said to be charged on the estate. But so long as the right does not take that concrete or choate shape, it cannot he said that the husband cannot dispose of the property as he liked. The Appellate Tribunal was not right in law in allowing deduction towards maintenance expenses of the wife of the deceased from the estate passing on his death."
8. What is stated by the Honble High Court of Andhra Pradesh with regard to the widow of the deceased in the above case fully applies to the case of maintenance claim of the daughters in the present case before us. None of the two daughters in this case either filed suits claiming their maintenance right including the right to marriage expenses, or did they obtain any decrees with charge for their maintenance on any particular portion of the property of the deceased. Their right if any does not take concrete shape and, therefore, unless their right took a concrete shape it cannot be claimed as a deduction from the estate of the deceased under section 44 of the Estate Duty Act. It is significant that the decision of A. P. High Court in Smt. P. Leelavathammas case (supra) is rendered under the E. D. Act itself. In our opinion, it fully applies to the facts of the case and negative the claim of the accountable person for deduction of Rs. 3,24,898. Consequently we hold that grant of Rs. 80,000 towards marriage expenses of the last daughter cannot be considered under section 44 of the E. D. Act and is, therefore, not liable to be deducted. In the facts of the present case the first daughter was already married four days before the death of the deceased. No material is placed before us to prove that her marriage was performed with moneys belonging to anybody else other than that of her father, the deceased. After marriage the first daughter need not be maintained by her father. Therefore, it is inconceivable to contemplate any claim for maintenance against the father with regard to this first daughter. Even with regard to the second daughter her mere claim for maintenance would not be taken to be a debt owed by the deceased or as an encumbrance on the estate of the deceased, she not having filed any suit or obtained a decree creating a charge on a part of the deceaseds property. We hold that the second daughter cannot have the right of inheritance as well as the right of maintenance. She has to look to her inherited share only for satisfying her right of maintenance if any. For these reasons, we are of the firm view and we hold that either Rs. 3,24,898 or Rs. 80,000 granted by the learned Appellate Controller cannot be deducted from out of the total estate of the deceased either constituting as debt or encumbrance u/s. 44 of the Estate Duty Act.
9. We hold that the shares obtained by the sons of the deceased on his death constitute part of the estate which passed on the death of the deceased under section 5 of the E. D. Act. We also hold that under section 34(1) (c) the shares of the sons in their fathers estate cannot be aggregated and the duty rebate cannot be obtained under section 34(1) (c) since they are not Hindus and since section 34(1) (c) does not apply to them. Further we wish to point out that Rs. 1,24,040 was never claimed as deduction even in the E. D. return Even according to the accountable person the said sum represents only a rebate which her sons are entitled to. Grant of Rs. 30,000 as deduction out of Rs. 1,24,040 claimed as rebate is a thorough mistake. Rs. 1,24,040 was never claimed as deduction towards right of maintenance of the minor son. Hence granting Rs. 30,000 or any other sum as deduction towards maintenance of the minor son is clearly illegal. Further in our view the minor son cannot have both right of maintenance as well as right of inheritance. He has to look to his share of the inherited property to satisfy his right of maintenance. Therefore, either the sum of Rs. 1,24,040 or the sum of Rs. 30,000 can be deducted from out of the estate of the deceased. Hence the two grounds taken up for consideration are to be held in favour of the department and against the accountable person.
10. In the appeal filed by the accountable person, the question of levying interest for late filing of the return and the interest for late payment of provisional demand are the two more grounds remaining to be disposed of. Section 53(3) and Rule 42 of the E. D. Rules are the relevant provisions of law which we have to see and apply while disposing of the question of interest for late filing of the return. The interest charged for late filing of the return was Rs. 35,030. The Appellate Controller gave a relief of Rs. 4,605. The amount in dispute now before us is Rs. 30,335. The interest for late payment of provisional demand is Rs. 3,909 and the same is sustained by the Appellate Controller and so the same amount is now subject-matter in this second appeal before us. Since the date of death is 30-11-1984 and since the estate duty account is to be submitted within 6 months from the date of death, the due date for filing the return in this case is on or before 30-5-1985. However, the return was filed on 21-4-1986. On 30-5-1985, the assessee filed a petition seeking extension of time for filing the return up to 31-12-1985. The Asst. Controller of Estate Duty payable. The case of the accountable person is that as per Rule 42 of the E. D. Rules interest of more than 6% cannot be levied and so out of the total interest of Rs. 35,030 only an amount of Rs. 17,684 is legally exigible and the extra amount of Rs. 17,646 cannot be levied against the accountable person or against the estate of the deceased towards late filing of the E. D. account Learned counsel for the accountable person submitted that on 30-12-1985 further time was asked for seeking further extension of time for filing the return. However, the Asst. Controller of Estate Duty did not grant time by passing any specific order or intimating the same to the accountable person. He merely intimated posting the case on 21-4-1986 on which date the accountable person filed her estate duty account. Section 53(3) of the E. D. Act is as follows :
"Every person accountable for estate duty under this section shall, within six months of the death of the deceased, deliver to the Controller an account in the prescribed form and verified in the prescribed manner of all the properties in respect of which estate duty is payable :
Provided that the Controller may extend the period of six months aforesaid on such terms which may include payment of interest as may be prescribed."
Rule 42 of the Estate Duty Rules, 1953 prescribes the terms and conditions on which the period for filing the account of the deceased may be extended. Rule 42(c) is as follow :
"the person accountable shall pay interest for the period by which the original period of six months has been extended, on the amount specified in clause (e) or on such lower amount as the Controller may in his discretion decided."
Rule 42(d) reads as under :
"the rate of interest shall be six per cent, per annum :
Provided that the Controller may, in any particular case, specify such reduced rate of interest as may be appropriate to that case in accordance with the general instructions issued by the Board in this behalf;"
From the above provisions, it is clear that a period of six months can be extended on certain terms. The terms include charging of interest of not more than 6% for the extended period. Here the period extended is only up to 31-12-1985. There is no order governing the extension from 31-12-1985 to 21-4-1986. We hold that for the said period no interest can be charged since the said period cannot be said to be an extended period with any condition or without any condition. The matter is squarely covered by a direct authority of the Allahabad High Court in Dharmatma Saran Kothyiwal V. ACED [1988] 172 ITR 122 in which it is held as follows :
"By means of any subsequent amendment, the provisions of sub-suction (8) of section 139 of the Income-tax Act have not been applied to the proceedings under the Estate Duty Act. Under section 60(1) (a) of the Act, the Assistant Controller may be entitled to take penalty proceedings as against a person who has not filed the return within time. But that is a proceeding separate in nature having involved and different consequences than charging of interest. In this case also, while making the regular assessment order, respondent No. 1 had directed :
"Penalty proceedings under section 61(1) (a) of the Estate Duty Act have been initiated separately. Issue notice..."
We are unable to find any provision in the Act which entitles respondent No. 1 to impose interest of Rs. 15,093 for belated filing of the return. In the counter affidavit, charging of interest has been justified on the basis of section 53. We have not been able to get anything from this section which confers power on respondent No. 1 to charge interest for late filing of the return. A statutory authority created by an Act has only those powers which are conferred on it by the statute. It cannot assume powers which Parliament or the Legislature has not given to it. In the Income-tax Act, Parliament specifically provided in sub-section (8) of section 139 for charging of interest for belated returns. Under this Act, interest is automatic irrespective of the assessees applying for time or of the Income-tax Officer allowing time.
Sub-section (3) of section 53 provides that every person accountable for estate duty shall, within six months of the death of the deceased deliver to the Controller an account in the prescribed form and verified in the prescribed manner of all the properties in respect of which estate duty is payable. This period of six months can, however, be extended under the provision appended to it. The proviso confers power on the Controller to extend the period of six months on such terms which may include payment of interest. Under this provision, therefore, if extension is not applied for under sub-section (3) of section 53, it is mandatory to file the return within six months of the death of the deceased. The accountable person, however, can apply for extension which can be allowed subject to payment of interest.
We, consequently, find that in a case where no order for extension of time is made subject to the payment of interest, the Controller has no power to charge the same on the basis of the proviso to sub-section (3) of section 53. The Act does not provide for charging of interest in such a case. Consequently, the interest could not be charged and the levy of Rs. 15,093 was unauthorised and illegal."
As per the above authority we have to hold that no interest can be charged from 31-12-1985 to 21-4-1986. We therefore direct that the excess interest at 6% of the interest charged from 31-12-1985 to 21-4-1986 on due verification should be returned to the accountable person or adjusted towards the estate duty if any payable.
11. Now remains the question whether any interest for late payment of provisional duty is there. Besides the regular assessment made on 29-1-1987, there is no provisional assessment made under which provisional estate duty is payable to the department. Section 57 empowers the Asst. Controller of Estate Duty to make a provisional assessment in case the account was delivered under section 53 or section 56. Before making a provisional assessment, the Asst. Controller of Estate Duty has to proceed in a summary manner. If any amount is paid under the provisional assessment, the amount so paid should be deemed to have been paid towards regular assessment if such regular assessment is made u/s. 58 of the E. D. Act. We searched in vain in the Estate Duty Act and Rules thereunder for a provision which empowers the Asst. Controller of Estate Duty to Levy interest for non-payment on provisional assessment. Since a taxing statute is to be strictly construed and since we do not find any provision authorising the revenue to collect interest for delay in payment of provisional assessment and since there is no provisional assessment made, we are of the opinion that the levy of the interest of Rs. 3,909 is illegal and cannot be sustained.
12. Hence the appeal by the accountable person is partly allowed and the appeal file by the revenue is fully allowed.