TMI Blog2000 (4) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... died on October 5, 1979. The accountable person, Sri Mohanlal Bazaz, filed an estate duty return on September 13, 1980. The Assistant Controller of Estate Duty computed the principal value of the estate of the deceased at Rs. 9,05,451. During the course of valuing the estate for the purpose of estate duty, the assessee claimed that there shall be a deduction of estate duty liability from the principal value of the estate. This claim was negatived by the Assistant Controller of Estate Duty in his order dated March 31, 1987. In appeal the Controller of Estate Duty (Appeals) has also negatived the claim of the accountable person. In second appeal before the Tribunal it has considered the decision of the Gujarat High Court in Smt. Shantaben Na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erate only in respect of the immovable property cannot be overemphasised. If the arguments of learned counsel for the assessee were right, the entire estate including the movable property passing on the death would at the very moment of death and at the identical moment of passing be burdened by incumbrance arising in the context of the exigibility to pay the estate duty. Under section 74(1), however, the charge will operate in respect of only the immovable property and not the movable property. This would introduce a fatal contradiction in the argument for if the estate of the deceased were to contain only movable property, section 74(1) will not be attracted and estate duty payable thereon cannot be deducted from the value of the estate p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat, on that account, the amount payable as estate duty deserves to be excluded from the value of the estate. Now, in the first place, section 44, inter alia, provides for exclusion of debts and incumbrances in determining the value of the estate passing on the death of the deceased. The question necessarily arises what exactly is meant by 'debts' and 'incumbrances'. Learned counsel for the assessee is unable to show that the expression 'debts' is referable to debts other than debts of the deceased. What must be deducted from the estate passing on the death are the debts of the deceased for the very good reason that it is the surplus of the assets over the liabilities which passes on the death of the deceased regardless of in whose hands it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... burden arises instantaneously with the death of the deceased by virtue of its exigibility to pay tax under section 5 of the Act. It is no doubt a statutory liability but the mere fact that the liability is created by the statute will not make it a liability coupled with a charge on all the properties, movable and immovable, comprised in the estate of the deceased. A charge will not fasten itself on the properties unless a charge is created by the parties or by operation of law. Even under section 74 a charge would be created only in respect of immovable properties and not in respect of movable properties. What is more, it would not fall within the ambit of the expression 'debts' and 'incumbrances' employed in section 44 of the Act particul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... breath that he might have inhaled if he were not dead. The concept of time itself is a concept of human mind and, therefore, we have to visualize a minimal point of the time when the deceased breathed his last and visualise the very next moment, which is the point of time when passing of the estate takes place, Passing of property must follow the death of necessity and, therefore, death and passing cannot be simultaneous." The Gauhati High Court also has considered the similar issue in Bhawani Shankar Bagaria v. Asst. CED [1982] 137 ITR 801. At page 808, they also have taken the same view as has been taken by the Gujarat High Court holding that an obligation like charge created under section 74 of the Act which came to be attached to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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