C.S.P Singh, J.:— This is a c???nposite reference at the instance of the assessee as well as the department??? nd the questions referred are:
“1. Whether, on the facts and in the circumstances of the case, the Tribupal was correct in holding that the value of the share of the lineal descendant of the deceased in the joint family property was includible under section 4(1)(c) for rate purposes?
2. Whether the Tribunal was correct in law in holding that the estate duty chargeable under section 5 of the Estate Duty Act was not deductible for computing the principal value of the property passing on the death of the deceased?”
2. Maharaja Pateshwari Prasad Singh died on 30th June, 1964, leaving behind his widow, Maharani Raj Laxmi Devi, the accountable person, and an adopted son as his legal heirs. The Maharaja was the karta of the joint Hindu family which owned a number of properties including Neel Bagh Palace at the time of his death. In the present reference we are concerned with the inclusion of ⅓ share of the son in the joint family property under s. 34(1)(c) of the E.D Act, the claim for deduction of estate duty from the principal value of the estate of the deceased, and the valuation of the Neel Bagh Palace. The Assistant Controller included the value of one-third share of the adopted son in the principal value of the estate for rate purposes. He also negatived the claim of the accountable person regarding deduction of estate duty as, in his view, the estate duty was neither a debt nor an encumbrance, which was liable to be deducted under s. 44 while calculating the principal value. As regards the valuation of the Neel Bagh Palace he accepted the valuation given by the executive engineer, valuation cell, I.T Dept., Lucknow, in preference to the valuation given by the accountable person, which was based on the report of an approved valuer, Sri T.N Gupta. The appeal filed by the accountable person failed and thereupon the matter was taken up before the Tribunal. The Tribunal held against the assessee as respects the inclusion of the value of one-third share of the son in the principal value of the estate of the deceased as also the claim for deduction of estate duty from the principal value of the estate. As regards the valuation of the Neel Bagh Palace it held that, as the building was in the occupation of the deceased and was governed by the provisions of the U.P Rent Control and Eviction Act, it had to be valued by applying a multiple to the annual value of the building worked out for purposes of municipal assessment. Taking the net annual income at Rs. 11,500 it applied a multiple of 16 and valued the palace at Rs. 1,84,000. Coming to the first question, it is not disputed that at the time when the Maharaja died he was the member of the HUF which owned coparcenary property, and that his adopted son had one-third share in that pro perty. The question is whether the value of the son's interest in the coparcenary property could be aggregated under s. 34(1)(c) of the Act? Section 34(1)(c) runs:
“34. (1) For the purpose o??? ietermining the rate of the estate duty to be paid on any property passi ??? on the death of the deceased,—……
(c) in the case of properi??? so passing which consists of a coparcenary interest in the joint famil??? property of a Hindu family governed by the Mitakshara, Marumakkattayam???? or Aliysantana law, also the interest in the joint family property of a ???he lineal descendants of the deceased member;
shall be aggregated so as to ???cm one estate and estate duty shall be levied thereon at the rate or ra ???applicable in respect of the principal value thereof.”
3. In order that s. 34(1)(c) may ???ply the property that passes must con-. sist of the coparcenary interest ??? the joint family property of a Hindu family governed by the Mitaksha ???, and on this condition being fulfilled the interest in the joint family pr ???erty of all the lineal descendants of the deceased has to be aggregated so ??? to form one estate for purposes of fixing the rate of duty applicable on ???e principal value of the estate. When the Maharaja died his interest in ??? coparcenary ceased, and, in view of s. 7(1), this interest passed on ??? death to the extent to which benefit accrued to the other coparceners. This position is clear from a reading of s. 7(1), which may be extracted:
“7. (1) Subject to the prov???ons of this section, property in which the deceased, or any other person???d an interest ceasing on the death of the deceased, shall be deemed to ???s on the deceased's death to the extent to which a benefit accrues or arise ???y the cesser of such interest, including, in particular, a coparcenary inte???st in the joint family property of a Hindu family governed by the ???akshara, Marumakkattayam or Aliya-santana law.”
4. As has been seen the Maharaj??? lad a lineal descendant, i.e, adopted son, and s. 34(1)(c) apparently per???ted an aggregation of the value of the interest of the lineal descendant in ??? principal value of the estate of the deceased. Counsel for the assessee??? lowever, urged that with the passing of the Hindu Succession Act, 1956, ???ing Act No. 30 of 1956, a coparcener is deemed to be separate from the ???er coparceners, and as such there was no coparcenary in existence at the???ne of the Maharaja's death. It was also urged that the entire concepti??? of coparcener and coparcenary property stands abrogated in view of s??? 6 and 30 of the Hindu Succession Act, 1956, and, as such, s. 34(1)(c) has ???ecome redundant, and could not be applied. For reasons to be set out ??? reinafter we are unable to accept this contention. To begin with we may??? tice the purpose of the Hindu Succession Act. The preamble of the Act??? scribes the Act as one to amend and codify the law, relating to intestate ??? luccession among Hindus. We may now next turn to s. 4. It will be useful to extract cls. (a) and (b) of this provision:
“4. (1) Save as otherwise expressly provided in this Act,—
(a) any text, rule or interpretation of Hindu law or any custom or usage as part of that law in force immediately before the commencement of this Act shall cease to have effect with respect to any matter for which provision is made in this Act;
(b) any other law in force immediately before the commencement of this Act shall cease to apply to Hindus in so far as it is inconsistent with any of the provisions contained in this Act.”
5. It is necessary to state the effect of this provision at this stage. As will be noticed s. 4 has an overriding effect over any text, rule or interpretation of Hindu law or any custom or usage in force before this enactment. There is, however, a rider to the effect that the provisions of the Act prevail only as respects such matters for which provision is made in the Act. This is further clarified by s. 4(1)(b) which clearly states that laws inconsistent with the provisions of the Act will cease to apply to Hindus. We may now turn to ss. 6 and 30 of the Act. It is necessary to set them out in extenso:
“6. When a male Hindu dies after the commencement of this Act, having at the time of his death an interest in a Mitakshara coparcenary property, his interest in the property shall devolve by survivorship upon the surviving members of the coparcenary and not in accordance with this Act:
Provided that, if the deceased had left him surviving a female relative specified in Class I of the Schedule or a male relative specified in that class who claims through such female relative, the interest of the deceased in the Mitakshara coparcenary property shall devolve by testamentary or intestate succession, as the case may be, under this Act and not by survivor ship…….”
“30. (1) Any Hindu may dispose of by will or other testamentary disposition any property, which is capable of being so disposed of by him, in accordance with the provisions of the Indian Succession Act, 1925 (39 of 1925), or any other law for the time being in force and applicable to Hindus.
Explanation.— The interest of a male Hindu in a Mitakshara coparcenary property or the interest of a member of a tarwad, tavazhi, Mom, kutumba or kavaru in the property of the tarwad, tavazhi, illom, kutumba or kavaru shall, notwithstanding anything contained in this Act or in any other law for the time being in force, be deemed to be property capable of being disposed of by him or by her within the meaning of this sub-section.”
6. Counsel for the assessee urged that the proviso to s. 6 effects a disruption in the coparcenary family in case a person has a female or male relative, specified in cl. (1) of the Schedule to the Act. It was stressed that once a partition in the family has taken place on account of the fiction created by the proviso to s. 6, the Maharaja must be deemed to have been separated from his adopted son before his death, and as such the value of the estate of the son could not be aggregated with that of the deceased Maharaja. There is an inherent fallacy in this argument. In the first place, the proviso creates a fiction only for purposes of s. 6. Now, s. 6 sets out the mode of devolution of interest in coparcenary property. Thus, the fiction created by the proviso is only for purposes of fixing the persons who are entitled to succeed to the property of the deceased coparcener. It comes into operation only after the death of the coparcener, and only for the limited purpose of laying down the succession. This interpretation of the Explanation is in consonance with the principle that a legal fiction must be limited to the purpose for which it has been created, and cannot be extended beyond its legitimate field. (See K. S. Dharmadatan v. Central Govt., (1979) 4 SCC 204 : AIR 1979 SC 1495). It does not effect a partition by operation of law as has been contended, for the language of the proviso does not suggest so. In fact, in the event of a Hindu coparcener not having a female or male relative specified in the Schedule, the proviso does not come into play at all, for, in that event, the property of the deceased coparcener devolves on the surviving members of the coparcener, and not in accordance with the Schedule of the Act (see first part of s. 6). Further, the very fact that s. 6 talks of a male Hindu having an interest in a Mitakshara coparcenary postulates that at the time of death of the Hindu male a coparcenary existed of which he was a member. This militates against the contention that the proviso effects a partition in the coparcenary during the lifetime of the coparcener. After the death of the coparcener there cannot be any question of a partition at all between the deceased coparcener and a surviving member of the coparcenary, because a partition can be effected between living coparceners or persons who claim under a deceased coparcener. Counsel, however, contended that the decision of the Supreme Court in the case of Gurupad Khandappa Magdum v. Hirabai Khandappa Magdum, (1978) 3 SCC 383 : AIR 1978 SC 1239, supports his contention. He has particularly relied on the observations of the Supreme Court on page 1243 as under:
“In order to ascertain the share of heirs in the property of a deceased coparcener it is necessary in the very nature of things, and as the very first step, to ascertain the share of the deceased in the coparcenary property. For, by doing that alone can one determine the extent of the claimant's share. Explanation 1 to s. 6 resorts to the simple expedient, undoubtedly fictional, that 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 that property had taken place immediately before his death. What is, therefore, required to be assumed is that a partition had in fact taken place between the deceased and his coparceners immediately before his death. That assumption, once made, is irrevocable. In other words, the assumption having been made once for the purpose of ascertaining the share of the deceased in the coparcenary property, one cannot go back on that assumption and ascertain the share of the heirs without reference to it. The assumption which the statute requires to be made that a partition had in fact taken place must permeate the entire process of ascertainment of the ultimate share of the heirs, through all its stages. To make the assumption at the initial stage for the limited purpose of ascertaining the share of the deceased and then to ignore it for calculating the quantum of the share of the heirs is truly to permit one's imagination to boggle. All the consequences which flow from a real partition have to be logically worked out, which means that the share of the heirs must be ascertained on the basis that they had separated from one another and had received a share in the partition which had taken place during the lifetime of the deceased. The allotment of this share is not a processual step devised merely for the purpose of working out some other conclusion. It has to be treated and accepted as a concrete reality, something that cannot be recalled just as a share allotted to a coparcener in an actual partition cannot generally be recalled. The inevitable corollary of this position is that the heir will get his or her share in the interest which the deceased had in the coparcenary property at the time of his death, in addition to the share which he or she received or must be deemed to have received in the notional partition.”
7. The passage extracted, however, does not support the contention as the observations have been made in the context of the controversy that arose as respects the share which the heirs of a deceased coparcener would get on his death. Our attention was next drawn to s. 30 of the Act, which has already been extracted, and it was urged that inasmuch as this provision granted a Hindu coparcener the right to dispose of his share in the coparcenary property by a will, which was against the tenets of the normal Hindu law relating to Hindu coparcenary property, it has sounded the death knell of the conception of a coparcenary. We are unable to accept this contention too, for, although s. 30 makes a striking departure from the existing law governing coparceners, it does not destroy the existence of a coparcenary, but all that it does is to grant the right of testamentary disposition to a Hindu coparcener which he did not enjoy earlier to this enactment. It may be useful to refer to the rights which a coparcener has in respect of coparcenary property under the Hindu law. Mulla, in his Principles of Hindu Law, has set out the following rights which a coparcener enjoys in respect of coparcenary property. The rights are: community of interest and unity of possession of coparcenary property, share of income, (3) joint possession and joint right of maintenance out of the family estate, (4) right to enforce partition, (5) right of survivorship. Further, the manager of the coparcenary property has certain special powers of disposition over coparcenary property which no other coparcener has. The father who constitutes a coparcenary with his sons has similar special powers. There are certain restrictions on the members of a coparcenary, one of them being that a coparcener cannot dispose of his undivided interest in the coparcenary property by gift nor can he alienate his interest even for value except in Bombay, Madras and Madhya Pradesh. Similarly, a coparcener cannot bequeath his coparcenary property by will. So far as s. 30 is concerned all that it does is to lift the bar on testamentary disposition of undivided interest of a coparcener in his coparcenary property. The other rights which a coparcener has are left untouched. Thus, as s. 30 does not impinge upon the other rights which a coparcener has under the Hindu law, nor does it expressly or by implication affect the existence of coparcenary, the abrogation of the restriction of testamentary disposition does not destroy the existence of a coparcener or coparcenary property. This being so, the interest of the son of the deceased, Maharaja, was rightly aggregated in the principal value of the estate of the deceased.
8. So far as the second question is concerned the field is completely covered by the decisions in In re Mrs. Constance Lubeck, [1970] 78 ITR 199 (Mad), Smt. V. Pramila v. CED, [1975] 99 ITR 221 (Kar), CED v. Estate of Late Omprakash Bajaj, [1977] 110 ITR 263 (AP), Smt. Shantaben Narottamdas v. CED, [1978] 111 ITR 365 (Guj) and CED v. Smt. P. Leelavathamma, [1978] 112 ITR 739 (AP). We cannot find any reason to depart from this course of view. Thus, it must be held that the amount of estate duty chargeable under s. 5 could not be deducted for purposes of computing the value of the property on death.
9. Coming now to the third question, it is not disputed that the U.P (Temporary) Control of Rent and Eviction Act, 1947, applied to Balrampur where the Neel Bagh Palace was situated. It has been seen that the Tribunal has held that in the case of a self-occupied property the only method of finding out the market value thereof is by applying an appropriate multiple to the annual value worked out for purposes of municipal assessment. This court, however, in the case of P.D Singhania v. CIT (I.T.A No. 5438 of 1966–67 dt. 9-7-68) has held that the valuation fixed or municipal assessment of buildings to which the U.P (Temporary) Control of Rent and Eviction Act, 1947, applied is not a safe guide for determining the fair market value of the property. As at present advised, we see no reason to depart from that view. Counsel for the assessee, however, drew our attention to the decision of the Supreme Court in the case of Corporation of Calcutta v. Smt. Padma Debi, AIR 1962 SC 151, a case arising under the Calcutta Municipalities Act, wherein it has been held that for purposes of calculating the gross annual rent at which a building might reasonably be expected to be let, the annual rent had to be calculated on the basis of the standard rent as fixed under the Rent Control Act of that State. The main consideration that weighed with their Lordships was that under the Rent Control Act of that State, the landlord could not let out the premises for a rent higher than the standard rent, for, if he did so, the contract for the higher amount of rent would not be enforceable, and further he would be liable to penal consequences. The position under the U.P Rent Control Act, 1947, is, however, different. Section 3A of the U.P Rent Control Act provides for determination of the annual reasonable rent by the District Magistrate. But that applies only in case no rent has been agreed between the landlord and the tenant under s. 5(1). Section 5(4) undoubtedly contains a provision for variation of the agreed rent or annual reasonable rent fixed under the Act or that declared by the District Magistrate under s. 3A by the civil court, but in the case of an agreed rent the court can vary it only in case the contract was unfair. Thus, contrary to the Rent Control Act as prevailing in the State of West Bengal, under the U.P Rent Control Act, 1947, no restriction has been put on the landlord to fix a rent higher than the annual reasonable rent in case the tenant agrees. No penal consequence ensues in case the agreed rent is higher than the annual reasonable rent, and once rent has been agreed between the landlord and the tenant, it cannot be varied unless the transaction is unfair. The provisions of the U.P Rent Control Act being dissimilar to the provisions of the Rent Control Act of West Bengal, the principle laid down by the Supreme Court in Padma Debt's case, AIR 1962 SC 151, cannot be made applicable for purposes of valuing the Neel Bagh Palace.
10. We, accordingly, answer the first two questions in the affirmative, and the third question by saying that the Tribunal is correct in holding that the self-occupied properties constructed prior, to 1st January, 1951, were governed by the U.P (Temporary) Control of Rent and Eviction Act, but the value could not be determined on the basis of the municipal assess ment by applying a multiple to its net annual letting value calculated for the purposes of municipal assessment. The department is entitled to its costs, which are assessed at Rs. 200. The counsel's fee is assessed at the same figure.