TMI Blog1981 (9) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... is business since a foreigner was prohibited from carrying on an independent business in Goa. In the circumstances, the deceased, Marzook Boodai, was constrained to take the accountable person, Cadar, as his associate, and both of them set up a joint business. The deceased, Marzook, stayed in the erstwhile Portuguese territory from 1945 up to 1958. On 24th May, 1958, a limited partnership under the name and style of Marzook and Cadar Ltd. was floated in Margao. The partners of this unit were the deceased and the accountable person, and they were not related to each other. After setting up this partnership the deceased migrated to Kuwait, making it his permanent home, although he had visited Goa twice after he left for Kuwait for good. The business had its headquarters initially at Margao, but the same were shifted to Panjim in 1961. The business continued till the death of Marzook in 1965. The business of the limited partnership mainly consisted in mining operations. On the death of Marzook in 1965, the Asstt. CED issued notices initiating proceedings under the ED Act, 1953. The Asstt. Controller brought to duty, in addition to the interest of the deceased in the firm by way of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal was called upon to consider the applicability of s. 44 and 47 of the ED Act. The Tribunal considered these sections and observed as follows : "While s. 44, by its main part, allows deduction of debts and encumbrances of the deceased, s. 47 virtually operates as a sort of proviso. The second part of s. 47 proceeds on the basis that the scope of s. 44, so far as it concerns the debts of the deceased, is wide enough to cover foreign debts, and the first part of s. 47 provides for the procedure and forges certain limitations in the matter of deductions of the particular type of foreign-debts. To invoke the applicability of s. 47, the debt must be to persons resident out of India. If these requisites are satisfied, the debt may first be set off against the property of the deceased situate outside India, provided estate duty is paid in respect of such property. In other words, when the value of the foreign asset is lower than the value of the foreign liabilities, the deficit has to be adjusted against the Indian assets." In conclusion the Tribunal summed up the position that the foreign liability overwhelmed the principal value of the estate of the deceased and as such there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment of estate duty in respect of any such debts, the word "such" obviously referable to debts due from the deceased to persons resident out of India. In other words, the first part refers to a claim for an allowance for such debts and the latter part or the second part provides for repayment of estate duty in respect of such debts if certain conditions are satisfied. Before us Mr. Joshi appearing on behalf of the Department has accepted the factual findings, namely, that there was an aggregate debt of Rs. 82,20,000 due by the deceased to the two foreign parties, namely, the National Bank of Kuwait and Md. Kharafi, the break-up being Rs. 32,00,000 and Rs. 50,20,000, respectively. He has also accepted the findings of the Appellate Controller that there were foreign assets of about Rs. 15,00,000 available to meet the liabilities, leaving a deficit of Rs. 67,20,000. The computation of the principal value in India liable to estate duty (if the foreign debt is disregarded) at Rs. 50,65,578 is also accepted. The question he posed for our consideration was that no allowance or any credit was required to be given in respect of the deficit of Rs. 67,20,000 inasmuch as the deceased was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e out of India in respect of which estate duty is paid, the word "paid" obviously being used in the place of " Payable". Mr. Joshi referred us to s. 21 of the ED Act where we find a provision for including property outside India in the property passing on the death of the deceased, provided certain conditions are satisfied. Movable property situate outside India is to be included if the deceased was domiciled in India at the time of his death. Immovable property has been exempted from the operation of s. 21. Thus according to Mr. Joshi's argument unless there was movable property situate outside India and unless the deceased was domiciled in India, there could be no property of the deceased situate out of India in respect of which estate duty is paid (payable). In the case before us the deceased was admittedly domiciled in Kuwait. Mr. Joshi urged, therefore, that the view taken by the Tribunal as to the applicability of s. 47 was wholly and totally erroneous and was required to be declared as such. Mr. Dastur, on the other hand, drew our attention to Hanson's Death Duties, 10th Edn., where commenting upon s. 7(2) of the Finance Act, 1894 (U. K.), the author has observed as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accountable person and not for totally disallowing such genuine debts. The argument was based upon the supposition that there could be foreign properties of two types, one liable to be added to the estate of the deceased for the purposes of computing estate duty and the other not so liable. In our opinion, it is unnecessary to go in depth into these various arguments dealing with the first part of s. 47 of the ED Act. We will only say that the position is not as clear as it appeared to the Appellate Controller and the Tribunal, and in an appropriate case the opening para would require serious consideration. We say so because, in our opinion, so such difficulty really arises for applying the latter part of s. 47 subject to one necessary clarification which we must make. The latter part of the section which we have already extracted earlier does not use the words "in the first instance", and the non-user of these words in the latter part as contrasted with the user in the first part seems to suggest that the allowance is only initially not to be permitted but that it is subsequently required to be considered and this consideration will be at the stage of repayment of estate duty. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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