Emotions are an important aspect of human nature and behaviour that helps a person communicate and interact with others in a social environment. The present work is such an attempt towards machine intelligence, to recognize the cause-and-effect of the emotional states of humans. In the present times, the intelligence quotient (IQ) measured earlier is replaced by the emotional intelligence (EI)- a factor that helps assess the performance and efficiency of humans in various arenas like home, office, sports, clubs etc.A Questionnaire has been designed, to be taken up by subjects whose emotional status, need to be understood. The set of answers received would fire the appropriate rule and result in a specific emotion. These set of rules, once designed are static. The concept of embedded emotion and hence of a rule in another rule (inheritance) is used. A set of 13 rules have been discovered depicting the causes of specific emotions and their inclusion in other emotions, thus enabling the design of augmented transition networks (ATN). Java Expert System Shell (JESS) has been used to design this rule-based emotion recognition system and the results are presented in the corresponding results section