1. Under Section 64(1) of the E.D. Act, 1933, the following question has been referred to this court:
' Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the deceased was not the owner of the land in excess of the ceiling under the Land Reforms Act and that only the value of compensation receivable should be adopted in the estate duty assessment '
2. The estate duty assessment came to be made on the death of one Smt. K. Vijayammal on 1st April, 1970. She died possessed of 43'06 acres of land in two villages, viz., Vadakaravayal and Rajappianchavadi, in Mannargudi Taluk, Thanjavur District. In the return submitted for the E.D. assessment, the value of these lands was shown to be Rs. 95,170. For the assessment year 1970-71, a certificate from the village karnam regarding the value of these lands had been produced before the WTO, and the certificate showed their value to be Rs. 1,35,980. The chartered accountant, appearing 'on behalf of the accountable person, stated before the Asst. Controller that the certificate given by the karnam did not represent the real market value of the lands. The Asst. Controller overruled the objection and included a sum of Rs. 1,35,980 as the value of these lands, as against Rs. 95,170 admitted in the return. Against the order of the Asst. Controller, there was an appeal and the Appellate Controller took into account the Tamil Nadu Land Reforms (Fixation of Ceiling on Land) Act, 1961, which was amended by the Tamil Nadu Land Reforms (Reduction of Ceiling on Land) Act, 1970. He worked out the value of the surplus lands in the hands of the deceased to be Rs. 39,450 and substituted this with reference to the excess area. As regards the area which was covered within the ceiling limit, he does not appear to have made any change in the valuation. Against the order of the Appellate Controller, the Asst. Controller filed an appeal before the Tribunal. The Tribunal held thatthe value of the lands as taken by the Appellate Controller was quite fair and reasonable. In the view of the Tribunal in respect of the lands in excess of the ceiling limits, the deceased was not the owner of the land and had merely a right to receive'compensation. As this right to receive compensation had been taken as the basis for valuation of the agricultural lands held by the deceased in excess of the ceiling limit, the Tribunal upheld the valuation as adopted by the Appellate Controller. The question already set out is the one that arises out of this order of the Tribunal.
3. The real question that arises is whether the Tribunal was justified in holding that the deceased was not the owner of the land to the extent of 19 acres which was considered to be in excess of the ceiling under the amended Act. It is in this context that we have to refer to the provisions of the Tamil Nadu Act, 58 of 1961, as amended by the Tamil Nadu Act, 17 of 1970. The amended Act came into force on 15th February, 1970. In the amended Act, there is a reference to the notified date and this notified date is defined in Section 3(31) thus :
''Notified date means the date specified by the Government in a notification, which shall be a date after the date of( the publication of this Act.'
4. This Act was published on October 2, 1970. Under Section 5, as it was then in force, the ceiling area in the case of every family consisting of not more than 5 members was 15 standard acres. The term ' standard acres ' is defined in Section 3(40) and there is no dispute about the fact that in the present case, the excess over the ceiling limit was 13 standard acres equivalent to 19 ordinary acres of land in this area. Section 7 of the Act provides that:
'On and from the date of the commencement of this Act, no person shall, except as otherwise provided in this Act, but subject to the provisions of Chapter VIII, be entitled to hold land in excess of the ceiling area....'
5. Section 8 of the Act provides for the furnishing of a return by a person holding land in excess of the prescribed standard acres. Within 90 days from such date as may be specified in the notification issued by the Government in that behalf, every person, who, on the date of the commencement of the Act, held lands in excess of 30 standard acres, had to furnish to the authorised officer, within whose jurisdiction the holding of such person or the major part thereof is situated, a return containing certain particulars as shown in the section. Under Section 10, on the basis of the return furnished under Sub-section (1) of Section 8 and on the basis of the representation and evidence, the authorised officer was to prepare a draft statement in respect of each person holding or deemed to have held land in excess of the ceiling area, and such draft statement should contain certainspecified particulars. The authorised officer had under Section 11 power to decide the question of title in certain cases of dispute and there was to be a [final statement prepared and published under Section 12, specifying therein the entire land held by the person, the land to be retained by him within the ceiling area and the land declared to be surplus land and such other particulars as were prescribed. Section 18 provides :
' After the publication of the final statement under Section 12 or 14, the Government shall, subject to the provisions of Sections 16 and 17, publish a notification to the effect that the surplus land is required for a public purpose.'
6. Sub-section (2) of Section 18 provides :
' As soon as may be after the publication of a notification under subsection (1) the authorised officer shall,-- (a) cause to be published in every village or town in which any part of the land specified in such notification is situated a proclamation containing the terms of the notification.......'
7. Sub-section (3) of Section 18 provides :
' On the publication of the notification under Sub-section (1) the land specified in the notification together with the trees standing on such land and buildings, machinery, plant or apparatus constructed, erected or fixed on such land and used for agricultural purposes shall, subject to the provisions of this Act, be deemed to have been acquired for a public purpose and vested in the Government free from all encumbrances with effect from the date of such publication and all right, title and interest of all persons in such land shall, with effect from the said date, be deemed to have been extinguished......'
8. We have, as far as possible, tried to set out the provisions as in force on 1st April, 1970, at the time when the death took place, which is the material date for our purpose. There is a provision for filing an appeal against the order of the authorised officer under Section 78 and there is a further provision for a second appeal under s, 79. The compensation payable is to be determined in accordance with the provisions of Section 50.
9. It is in the light of these provisions that we have to consider the question whether the Tribunal acted rightly in holding that the deceased was not the owner of the surplus land on the 1st of April, 1970. The several provisions set out clearly go to show that only after the notification under Section 18 there is a vesting in the Government. The land continues in the ownership of the person until it actually vests in the Government. There can be no doubt about the fact that the deceased continued to be the owner of the land until actually action under Sections 10, 12 and 18 was taken, which was after her death.
10. The Tribunal has relied on the decision of a learned single judge of this court in K.S. Balakrishnan v. Commr. of Agrl. I.T. : 86ITR263(Mad) . In that case a person filed an application for the composition of agricultural income-tax on 16th June, 1966. He included in his return an extent of 29'37 acres of land which was in excess of the ceiling limit. As the lands were included in the returns made by the assessee, the Agrl. ITO passed an order of composition on 28th July, 1966. On 12th July, 1967, the assessee informed the Agrl. ITO that there was a reduction in the extent of the land held by him and requested the officer to reduce the amount specified in the order of composition, on the ground that an extent of 29.37 acres could not be deemed to be held by him under the provisions of the Agrl. I.T. Act, 1955, as under the Madras Land Reforms Act, 1961, they were above the ceiling limit. The Agrl. ITO rejected the application. The lands were actually taken over on 23rd May, 1966, after the commencement of the assessment year relevant in that case, viz., 1966-67. The matter came before this court under Article 226 of the Constitution challenging the action of the Agrl, ITO which was upheld by the Commr. of Agrl. I.T. The learned judge held that the assessee could not in the eye of law be said to be the owner of such excess land and could not be said to be the person who held lands during any part of the financial year in excess of the ceiling limit. In coming to this conclusion, the learned judge relied only on Section 7 of the Act and did not refer to the other provisions of the Act. There was an appeal against this judgment which came before a Bench of this court and the judgment of the learned single judge was reversed, vide Commr. of Agrl. I.T. v. K.S. Balakrishnan : 104ITR368(Mad) . It was held that Section 7 of the Land Reforms Act did not by itself have the effect of extinguishing the ownership of the holder of a land. It was pointed out that the said action merely made a declaration that from the commencement of the Act, no person shall be entitled to hold land in excess of the ceiling area. The vesting with reference to Section 18(3) took place only on the date of the publication of the notification under Section 18(1) and only then, it was held, the title of the person who held the excess land, would stand extinguished. It was also pointed out that Section 7 will not have the operation of extinguishing the ownership of a holder thereof, as vesting only followed a notification under Section 18(1). In view of the decision by the appellate Bench, it follows that the Tribunal's conclusion that the deceased ceased to be the owner of the land on the date of her death, cannot be correct. Learned counsel for the accountable person could not sustain this conclusion of the Tribunal by referring to any other feature.
11. Before the Appellate Tribunal, the question of valuation appears to have been raised. The Appellate Controller took the value of the lands inexcess of the ceiling at Rs. 39,450 as against Rs. 61,650, the proportionate value of Rs. 1,35,980 as taken by the Asst. Controller, The Tribunal has not considered the question of valuation perhaps because of its conclusion that the deceased was not the owner of the land in excess of the ceiling limit. aS it is now found that the deceased continued to be the owner of the land, the question of valuation will have to be gone into by the Tribunal in disposing of the appeal. The Appellate Controller has referred to the provisions of Section 22 as impinging on the value of the lands. However, in the question as it is before us, it is not necessary for us to go into the question whether Section 22 applied and what effect it had on the point of valuation. The Tribunal will have to consider it in the light of the facts and in accordance with the law.
12. The question referred to us is answered in the negative and in favour of the revenue. The revenue will be entitled to its costs. Counsel's fee is Rs. 500.