TMI Blog1974 (1) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... as due for payment for the assessment year 1964-65 as per the Income-tax Officer's order dated March 15, 1969. That was allowed. Further, there was a claim of Rs. 2,560 as liability to pay estate duty. The Assistant Controller held that there was no provision in the Estate Duty Act for allowing estate duty liability which arose after the death of the deceased. Accordingly, the Assistant Controller disallowed the claim. Being dissatisfied with the order of the Assistant Controller, the accountable person went in appeal before the Appellate Controller of Estate Duty. It was argued before him that the estate duty payable on the estate of the deceased should be allowed as a deduction from the gross duty payable. The learned counsel referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te. Reliance was also placed on Mrs. Blanche Nathalia Pinto v. State of Mysore . It was urged by the accountable person's counsel that immediately on the death of a person, estate duty became exigible in respect of the property which passed on his death. When it came to the hands of the executor it was an estate which was already burdened with liability to pay the estate duty. The Tribunal had an earlier occasion to deal with an identical question which arose before it in E.D.A. No. 143/67-68. There, the Tribunal held that the estate duty payable by the accountable person never fell for deduction from the principal value of the estate. The authorised representative referred to section 74 of the Act which laid down that the estate duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty. It was in the course of the passing of the estate that the existence of the liability emerged and not prior to it. JUDGMENT [After setting out the statement of case, Govinda Bhat C.J. continued.) GOVINDA BHAT C.J.--The Appellate Tribunal, Bangalore Bench, under section 64(1) of the Estate Duty Act, 1953 (hereinafter called "the Act"), has stated a case and referred the following question for the opinion of this court. " Whether, on the facts and in the circumstances of the case, the estate duty payable by the accountable person, is deductible in computing the net principal value of the estate of the deceased ? " One Varadaraja Setty died on May 6, 1965. The accountable person filed return before the Assistant Controller ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mining the value of an estate for the purpose of estate duty, allowance shall be made for funeral expenses (not exceeding rupees one thousand) and for debts and incumbrances; but an allowance shall not be made-- (a) for debts incurred by the deceased, or incumbrances created by a disposition made by the deceased unless, subject to the provisions of section 27, such debts or incumbrances were incurred or created bona fide for full consideration in money or money's worth wholly for the deceased's own use and benefit and take effect out of his interest, or (b) for any debt in respect whereof there is a right to reimbursement from any other estate or person, unless such reimbursement cannot be obtained, or (c) more than once for the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... K. Finance Act, 1894 (57 58 Vict. c. 30). Section 44 of the Act corresponds to section 7(1) of the U. K. Finance Act, 1894. The language of section 44 of the Act and of section 7(1) of the U.K. Finance Act, 1894, are identical. Although estate duty has been in force in the United Kingdom since 1894 it was never contended under the said Act that estate duty is liable to be deducted in determining the principal value of the estate of a deceased person. It was conceded by Sri K. Srinivasan, learned counsel for the accountable person, that according to the practice prevailing in the United Kingdom, estate duty payable on the estate is not one of the items for which deduction is given as a debt or encumbrance under section 7(1) of the Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act are debts of the deceased existing before the death and similarly encumbrances of the estate are those existing at the time of death. The accountable person claims deduction of the estate duty payable on the property passing on the death of the deceased under section 44 of the Act. That is the only section which provides for deductions. The principal value of property passing on death has to be ascertained in the manner provided by the Act. If estate duty payable on the estate of a deceased does not fall under section 44 of the Act, the accountable person is not entitled to claim deduction for the same. That estate duty payable on the estate of a deceased does not come under section 44 of the Act is clear from sub-section (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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