Per Shri F. C. Rustagi, Judicial Member - The accountable person has come forward with three grounds in this appeal under the Estate Duty Act, 1953 (the Act) the first main ground being in respect of Rs. 1 lakh received as ex gratia payment by the specified members of family of the deceased Shri Lalit Bhatia, who died in an air-crash. Lalit Bhatia was employed in the Air force, Government of India. The Assistant Controller subjected the said amount of Rs. 1 lakh to levy to estate duty and while doing so he placed his reliance on the Case of CED v. A. T. Sahani  78 ITR 508 (Delhi). When the dispute came before the Controller (Appeal), he also confirmed the action of the Assistant Cotroller for the reasons given by him in his order.
2. While disputing this action of the Controller, the learned counsel for the accountable person, Mr. D. K. Gupta, submitted that payment of Rs. 1 lakh received on the death of Shri Lalit Bhatia had two important characters - first being that it was ex gratia payment, for which he read out the order as per which sum of Rs. 1 lakh was paid; and secondly, that it was payable and paid to specified members of the deceaseds family. Against the case of A. T. Sahani (supra), relied upon by the revenue, he placed his reliance on the cases of CED v. Kasturi Lal Jain  93 ITR 435 (J & K), CED v. Smt. Motia Rani Malhotra  98 ITR 42 (Punj. & Har) and Smt. Lakshmisagar Reddy v. CED  123 ITR 601 (AP). In the alternative, he also submitted that at the most is becomes a case of two opinions and, in that case, one favouring the accountable person is to be relied upon. Regarding other two small grounds - one pertaining to valuation of Vespa Scooter, valuation of which was enhanced by the Assistant Controller from Rs. 1,000 to Rs. 2,500 and confirmed by the Controller, he only submitted that under the circumstances where head of the house had dies in an accident, the scooter may not fetch even that much, i.e., Rs. 1,000 shown by the accountable person in the return. Regarding third ground pertaining to exemption under section 33(1) (h) of the Act he submitted that he does not have any papers but in case it has been granted by the Assistant Controller, as observed by the Controller in his order, this would become infructuous but a direction in this respect may kindly be given.
3. The learned senior departmental representative, Mr. R. K. Bali, on the other hand, read out section 2(15) of the Act, and mainly relying on the order of the controller, placed his reliance on the case of A.T. Sahani (supra) and ultimately argued that it was on the basis of contract between the Government and the administration that sum of Rs. 1 lakh was payable to members of the family. According to him, it was property passing on death and, therefore, was rightly subjected to estate duty. He, however, could not controvert the fact there are two views on the issue -the Delhi High Court decision in the case of A. T.Sahani (supra) supporting the revenue and the rest the subject.
4. After taking into consideration the rival submissions, we are unable to confirm the inclusion of Rs. 1 lakh because there is no dispute about the fact that the said sum was paid as per the Government order dated 26-6-1978 in the case of Shri Lalit Bhatia deceased, which reads as under : "Subject : Ex gratia payments to the families of personnel travelling by service aircraft on duty and dying as a result of accident to the aircraft.
In superssion of this Ministrys letter No. Air-HQ/24229/171/PP & R/11645/Pen-C dated 24-11-1972, I am directed to convey the sanction of the President to the payment, on an ex gratia basis, at the uniform rate of Rs. 1,00,000 (Rs. One lakh only) in each case to the families of Armed Forces Personnel and Civilians paid from Defence Services Estimates who performance of their official duties (excluding those who travel on leave), as a result of accident to the aircraft. The families of the following categories of personnel involved in fatal accidents to the aircraft while on flying duty or being carried on duty in service aircraft will also equally be eligible for these ex gratia payments : 2. The mode of payment, namely, how much amount out of the total ex gratia award will be paid in one lump sum, how much as a long-term bank deposit and for what duration, etc., will be decided by the respective Service Headquarters in case of Serviceman and by the Ministry of Defence in cases of Civilians paid from Defence Service Estimates.
3. The ex gratia payments in question will be in addition to the special family pensionary awards/widows pension, etc. under C. C. S.(EOP) Rules, as admissible. The payment in each case will be sanctioned with the concurrence of Ministry of Finance (Defence).
5. This issues with the concurrence of the Ministry of Finance (Defence) side their U. O. No. 108/S/Pen of 1968." from the above order, it is clear that it is an ex gratia payment. Ex gratia, as per Oxford Dictionary means as an act of grace - whereas, as per the shorter Oxford English dictionary on Historical Principles, ex gratia means done or given as a favour specially implying the absence of any legal compulsion. Besides the aboverferred payment was ex gratia, there is no controversy about the fact that it was payable to the specified members of the family surviving the deceased,, as observed by the Controller in his order, as under : "Under this scheme, as modified from time to time, the grant is to be received partly in cash and partly in the form of fixed deposits by the specified members of the family surviving the deceased." 5. Then coming to the third aspect whether was it a right or asset or part of estate which could be disposed of by the deceased, because it is only the market value of such item which is to be included in the estate of the deceased, on the one hand, when we read section 2(16), with that, we cannot ignore the fact that only specified members were to be paid and the payment in question was ex gratia. On the issue of identical payment, we have the Andhra Pradesh High Court decision in the case of Smt. Lakshmisagar Reddy (supra), which followed the case of Kasturi Lal Jain (supra) and dissented from the case of A. T. Sahani (supra) on which reliance was placed by the two lower authorities. In the said case, it was held that such a property was not the property of the deceased which passed on his death to his heirs within the meaning of section 5 of the Act. In that case, it was further observed that if at all the property passed, it passed directly from the Indian Airlines Corporation to the family of the deceased. The Andhra Pradesh High Court, while following the said decision, as per its head-note, held as under : "Held, that rule 73 made it clear that in the event of the death of an employee by an accident, the Corporation might pay compensation to the legal representatives of the deceased at such rates and on such conditions as it might lay down from time to time, unless such accident, loss of damage is attributable to his own negligence or breach of instructions. The payment of compensation was discretionary and was dependent on satisfaction of certain conditions, viz. that the loss of accident must not have occurred due to the negligence of the deceased, etc. Hence it could not be said that the deceased had any beneficial interest in the compensation amount during his lifetime which was capable of being disposed of by the deceased. The amount was payable to the legal heirs only after the death of the deceased. No doubt the employee had the right or power to nominate the person who could receive such compensation payable under rule 73, but such a right to nominate a person, who cold receive compensation, could not be equated to a power or right, if any, of the deceased to dispose of the property. Hence, the compensation paid to the legal heirs by the Corporation under rule 73 on the death of the pilot in an accident was not includible in the estate of the deceased." (p. 602) The another decision, that of Smt. Motia Rani Malhotras case (supra) their Lordships of the Punjab and Haryana High Court have had the occasion to deal with the payment to specified members and in the said case, they observed as under : "... In the very nature of things the damages by way of compensation arise after the person is dead. The Act definitely provides for whom it is available. If it were part of his estate passing on his death, it would pass on to his heirs other than those specified in the Act, in case they are not in existence. But that does not happen. If the members of the family specified in the Act are not in existence, the payment has not to be made. Hence, the compensation is not property capable of passing on death..." (p. 42) In this case, their Lordships extracted and placed section 2(15) and 2(16) and following the Jammu and Kashmir High Court decision, referred to above, held the view against the revenue. Exclusion of Rs. 1 lakh, therefore, from the dutiable estate is hereby ordered.
6. Coming to the valuation of old Vespa Scooter, we are unable to confirm the finding of the two lower authorities because the value of scooter was enhanced to Rs. 2,500 by mere observation that Vespa Scooter is scarce and one even in worst condition would not be available for a petty sum of Rs. 1,000. What to talk of condition of the scooter, even model was not given. Maybe that Vespa Scooters are scarce but under the peculiar circumstances of this case, when head of the house was no more, widow even may not fetch that much (Rs. 1,000) for the scooter. Valuation of Rs. 1,000 is, therefore, ordered to be taken instead of Rs. 2,500 taken by the Assistant Controller and confirmed by the Controller.
7. Regarding the third contention, it is observed from the order of the Controller that deduction under section 33(1) (h) has already been allowed seeing from the assessment record. But in case it is not so, the Assistant Controller is directed to allow the same how.