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Issues:
- Interpretation of whether estate duty payable in respect of the estate of the deceased is deductible from the principal value of the estate. Analysis: The judgment pertains to an application under section 64(1) of the Estate Duty Act, 1953, where the Tribunal considered the question of whether the estate duty payable in respect of the estate of the deceased is deductible from the principal value of the estate. The accountable person claimed a deduction of estate duty liability from the principal value of the estate, which was rejected by the Assistant Controller of Estate Duty and the Controller of Estate Duty (Appeals). The Tribunal, in the second appeal, analyzed decisions of the Gujarat High Court and the Gauhati High Court on similar issues. The Gujarat High Court in Smt. Shantaben Narottamdas v. CED held that estate duty payable is not deductible from the value of the estate passing on the death of the deceased. The court emphasized that the charge for estate duty arises only in respect of immovable property, not movable property, and only after allowable debts and incumbrances are accounted for. The Gauhati High Court also supported this view in Bhawani Shankar Bagaria v. Asst. CED, stating that obligations like charges created under the Act after the death of the deceased are not to be considered in determining the principal value of the estate. The judgment further elaborated on the interpretation of sections 44 and 74 of the Act. It clarified that the legislative intent, as reflected in section 74(1), is that estate duty payable is not deductible from the valuation of the estate passing on the death of the deceased. The court highlighted that the expression 'incumbrance' in section 44 refers to charges or mortgages upon real or personal estate created by the deceased during their lifetime, not statutory liabilities like estate duty. The judgment emphasized the distinction between debts of the deceased and incumbrances created by the deceased, indicating that estate duty liability does not fall within the permissible deductions under section 44. Additionally, the court rejected the argument that the liability to pay estate duty should be considered an incumbrance, stating that it does not give rise to a charge on all properties in the estate. In conclusion, based on the decisions of the Gujarat High Court and the Gauhati High Court, the High Court of Calcutta found no merit in the accountable person's claim for a deduction of estate duty liability from the principal value of the estate. The court ruled in favor of the Revenue, holding that the estate duty payable is not deductible from the principal value of the estate passing on the death of the deceased. The reference application was accordingly disposed of, and all parties were directed to act on a signed copy of the order.
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