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Issues:
Whether the deduction of income tax liability and penalty under the Income-tax Act was properly disallowed in computing the principal value of the deceased's estate. Analysis: The judgment pertains to a reference under section 64(1) of the Estate Duty Act, 1953, regarding the deduction of income tax liability and penalty under the Income-tax Act in the computation of the principal value of the deceased's estate. The deceased's estate duty assessment was conducted, and the Assistant Controller determined the principal value of the estate and the estate duty payable. The applicant, the deceased's widow, appealed to the Board against the Assistant Controller's refusal to allow any deduction for income tax liability. The deceased had a significant income tax liability and penalty imposed by the Income-tax Officer, which was later deleted by the Income-tax Appellate Tribunal. The Board held that the income tax liability was an interest in or a right to property, which should be considered in valuing the estate. The Board concluded that the Assistant Controller was justified in disallowing the deduction for the income tax liability determined by the Income-tax Officer. The Central Board of Revenue disallowed the deductions solely based on the cancellation of the tax liability by the Income-tax Appellate Tribunal. However, a subsequent court order restored the Income-tax Officer's decision, making the tax liability valid again. As no appeal was filed against this court order, it became final. Consequently, the High Court held that the claim for the deduction of the income tax liability and penalty under the Income-tax Act should have been allowed in computing the principal value of the deceased's estate. The judgment favored the assessee, ruling against the revenue. The court made no order regarding costs in this matter.
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