RAMA JOIS, J. ( 1 ) THIS is a reference under Section 57 of the estate Duty Act. The question of law referred for our opinion reads:"whether on the facts and in the circumstances of the case, the ITAT is right in law in holding that the principle laid down in the decision of Kerala High Court in the case of T. R. Jayakar, 83 ITR 445 would be applicable for giving rebate on agricultural lands under Section 35 (3) of E. D. Act though the said decision related to the application of provision of Section 35 (1) of e. D. Act and the facts were also different?" ( 2 ) THE undisputed facts of the case are these: one M. Nagendra Rao died on 10-8-1974. M. Nalini Rao his wife was the accountable person. She rendered account relating to the estate of late M. Nagendra Rao. The deceased had two sons. The eldest son had predeceased Nagendra rao and his 1/3rd interest in the HUF had devolved on the mother Nalini Rao the accountable person under the provisions of the Hindu succession Act, 1956. As a result only half of the 2/3rd share interest of Nalini Rao in the joint family property passed on to the accountable person on the death of Nalini Rao. The total asset of Nalini Rao as found by the Assistant controller of Estate Duty in his order are:"summary movables Rs. 2,55,166/- immovables Rs. 82,760/- agril. lands Rs. 1,29,282/- rs. 4,67,208/- l/3rd int. of the deceased Rs. 1,55,736/-"the Assistant Controller computed 1/3rd interest of deceased as 1,55,736/- out of that he deducted a sum of Rs. 2,500/- under Section 33 (l) (c); Rs. 10,000/- under Section 33 (l) (n) and funeral expenses of Rs. 1,000/- in all amounting to rs. 13,500/ -. The balance of the amount came to Rs. 1,42,236/ -. ( 3 ) AS according to the charging Section 5 read with Section 35 (1) of the Act read with second Schedule, estate duty was leviable on the principal value of Rs. 1,42,236/- which passed on to the accountable person on the death of nagendra Rao. The Assistant Controller of Estate duty proceeded to compute the tax payable. He, however, had to include the share of the lineal descent for determining the rate of tax as provided under Section 34 of the Act. 1,42,236/- which passed on to the accountable person on the death of nagendra Rao. The Assistant Controller of Estate duty proceeded to compute the tax payable. He, however, had to include the share of the lineal descent for determining the rate of tax as provided under Section 34 of the Act. Accordingly he added l/3rd interest of the lineal descendants for rate purpose which was Rs. 1,55,736/ -. By adding the said amount to the total asset with reference to which rate of tax payable had to be included came to Rs. 2,97,972/ -. The Assistant controller proceeded to compute the tax payable as follows:"estate Duty on Rs. 2,00,000/- Rs. 12,000. 00 estate Duty on bal. Rs. 97,972/- Rs. 14,695. 00 total (average rate 8. 95%) Rs. 26,695. 00 less: rebate under section 33 (l) (h) 447. 50 rebate on l. D. 's share 13,938. 72 Rs. 14,386. 22 rs. 12,309. 58 add: int. under Section 53 Rs. 105. 00 rs. 12,414. 58 less: payment already made Rs. 3,700. 00 balance PAYABLE Rs. 8,714. 58" ( 4 ) THE order was taken up in appeal before the Appellate Controller of Estate Duty. Before the Appellate Controller of Estate Duty reliance was placed by the assessee on the Judgment of the Kerala High Court in the case of T. R. Jayasankar v Assistant Controller of Estate Duty, 83 ITR 445. That was a case in which the principal value of the estate which passed on to the accountable person on the death of the deceased was less than Rs. 50,000/ -. The Department contended that the value of the asset which passed on to the lineal descendants had to be aggregated in view of Section 34 of the Act and after such aggregation, for rate purpose accountable person was liable to tax under Section 5 read with section 35 (1) of the Act. This contention of the department was repelled by the Kerala High court on the ground that as the principal value of the estate which passed on to the accountable person was less than Rs. 50,000/- in view of Section 35 (1) read with first item in the Second schedule according to which no tax was leviable upto Rs. 50,000/- the assessee in that case was not liable to pay estate duty under the Act. 50,000/- in view of Section 35 (1) read with first item in the Second schedule according to which no tax was leviable upto Rs. 50,000/- the assessee in that case was not liable to pay estate duty under the Act. ( 5 ) IN the present case relying on the said decision assessee contended that as the value of the asset which passed on to the assessee was only Rs. 1,42,236/- the assessee was entitled to the rebate allowed under Section 35 (3) of the act. The contention of the Department was that as the value of the asset after aggregation for the purpose of rate under Section 34 (c) exceeded rs. 2 lakhs provisions of Section 35 (3) was not attracted. That contention was repelled by the Appellate Controller of Estate Duty and he directed the Assistant Controller of Estate duty to modify the assessment accordingly. That view was affirmed by the Tribunal. ( 6 ) SRI H. Raghavendra Rao, learned Counsel for the Revenue, contended that as the value of the estate after aggregation for rate purpose under Section 34 exceeded Rs. 2 lakhs, sub-section (3) of Section 35 was not attracted. 6. 1. In order to appreciate the contention it is necessary to set out the provisions of Section 35 (1) (3) and the Second Schedule of the Act: "35 (1) The rates of estate duty shall be as mentioned in the Second Schedule. xxx xxx xxx xxx (3) Notwithstanding anything contained in sub-section (1) and the Second Schedule, where any property passing on the death of any person consists wholly or in part of agricultural land and the principal value of the estate does not exceed rupees two lakhs, there shall be allowed by way of rebate- (a) in the case of an estate which consists wholly of agricultural land, a sum representing one-fourth of the estate duty payable; and (b) in the case of an estate which consists in part only of agricultural land, a sum representing one-fourth of the estate duty payable on that part of the estate which consists of agricultural land, the duty on such part being a sum which bears to the total amount of estate duty the same proportion as the value of the agricultural land bears to the value of the estate. " section 5 is the charging section. " section 5 is the charging section. According to that provision in the case of every person dying after the commencement of the Act, estate duty at the rate fixed in accordance with Section 35 has to be paid in respect of the principal value which passed on the death of such person by the accountable person except to the extent saved by other specific provisions of the Act. Sub-section (1) of Section 35 prescribes rate of estate duty and provides that the rate shall be as mentioned in the Second Schedule. According to the Second Schedule no tax is payable in case where the principal value of the estate does not exceed Rs. 50,000/ -. Different slabs are prescribed at Items 2 to 9 of the schedule. Section 34 of the Act, however, provides that for the purpose of determining the rate of tax payable under the Act, not only the principal value of the estate which passed on to the accountable person on the death of the deceased to be taken into account but also interests in the joint family property of all the lineal descendants should be taken into account. As stated earlier, in the present case while the principal value of the estate which passed on to the accountable person was computed at Rs. 1,42,236/- for rate purpose, l/3rd of the share of the lineal descendants which was Rs. 1,55,736/- was added and as a result the aggregate value for the purpose of fixation of rate was Rs. 2,97,972/- though it is inaccurately described in the order of the Assistant controller as the net principal value. ( 7 ) THE wording of sub-section (3) of Section 35 which comes up for interpretation in this case which is extracted earlier, in our opinion, is clear. The sub-section gets attracted only to cases where the principal value of the estate which passed on to the accountable person on the death of the deceased person does not exceed Rs. 2 lakhs. In such a case according to clause (a) if the estate consists wholly of agricultural land 1/4th of the estate duty payable has to be given as rebate. 2 lakhs. In such a case according to clause (a) if the estate consists wholly of agricultural land 1/4th of the estate duty payable has to be given as rebate. According to clause (b) where an estate passing on the death of a person to an accountable person was both agricultural land and non-agricultural land the rebate of estate duty payable should be given in the same proportion in which the value of the agricultural land bears to the value of the estate and equal to a sum representing one-fourth of the estate duty payable. ( 8 ) THE short question for consideration in this case is whether the principal value of the estate which passed on to the accountable person exceeded Rs. 2 lakhs or not. As stated earlier it does not. The principal value of the estate which passed on to the accountable person was only Rs. 1,42,236/ -. Therefore rebate as provided for under clause (b) had to be given to the accountable person for the reasons the estate consisted of both agricultural and non-agricultural land. ( 9 ) THE contention of the Revenue, however, is that the principal value of the estate exceeds rs. 2 lakhs and therefore provisions of sub-section (3) of Section 35 is not attracted to this case. The mistake which the Revenue has committed in making that submission is that in the present case, principle value of the estate was rs. 2,97,972/ -. The said value, as is evident from the facts stated earlier, is the value arrived at, after adding the value of the share of lineal descendants only for rate purposes as required under Section 34 of the Act. What is overlooked is that for the purpose of sub- section (3) of Section 35 what is relevant is only the principal value of the estate which passed on to the accountable person. In this case it is only Rs. 1,42,236/ -. The lineal descendants interest which is required to be added for rate purpose under Section 34 has no bearing on the provisions of sub-section (3) of Section 35 of the Act. In this case it is only Rs. 1,42,236/ -. The lineal descendants interest which is required to be added for rate purpose under Section 34 has no bearing on the provisions of sub-section (3) of Section 35 of the Act. The non-absentee clause in sub-section (3) refers only to the principle value of the estate passing on the death of any person, and not to the value arrived at after adding the value of the share of a lineal descendant, which is relevant only for rate purposes as provided by Section 34 of the Act. Therefore there is no merit in the contention of the revenue. ( 10 ) FOR the aforesaid reasons, we answer the question referred for our opinion in the affirmative and against the Revenue. --- *** --- .