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Issues:
1. Calculation of estate duty based on gifts made by deceased during his lifetime. 2. Deduction of outstanding liabilities from the value of the estate for estate duty purposes. 3. Interpretation of Section 44 of the E.D. Act, 1953 regarding allowance for debts and incumbrances. 4. Comparison with similar provisions in the Finance Act, 1894. 5. Precedents from previous court decisions on the interpretation of Section 44. Analysis: The judgment by the High Court of Bombay dealt with the calculation of estate duty concerning gifts made by the deceased during his lifetime. The deceased had made gifts amounting to Rs. 3,09,320, and the total value of the estate, including gifts, was shown as Rs. 34,06,150 with liabilities of Rs. 64,04,110. The Assistant Controller assessed the estate duty based on gifts and other values, leading to a deficit in the principal value of the estate. The key issue was whether the deficit of Rs. 30,71,030 could be set off against the sum of Rs. 6,18,052. The accountable person argued that estate duty should be based on the total value of the estate minus outstanding liabilities. However, the court held that Section 44 of the E.D. Act was crucial in determining the deduction of debts and incumbrances from the estate value for estate duty purposes. The court emphasized that deductions for debts and incumbrances could only be made as per the provisions of Section 44. The section specifies that debts and incumbrances should be deducted from the value of the property liable to such debts. The court clarified that the property against which debts can be enforced should be the one from which deductions are permissible. In this case, the property gifted inter vivos did not belong to the deceased at the time of death, and hence, creditors could not proceed against it. Therefore, the deficit outstanding liabilities could not be deducted from the properties passing under other titles. The judgment referenced Section 7(1) of the Finance Act, 1894, and highlighted a similar provision where debts and incumbrances should be deducted from the value of the property liable to them. Precedents from previous court decisions, such as In re Barnes (deceased) and CED v. R. R. Srinivasa Murthy, supported the interpretation of Section 44. The court concluded that the accountable person's argument was contrary to the clear provisions of the law, and the deficit outstanding liabilities could not be set off against the estate value for estate duty calculation. The court ruled against the accountable person and directed them to pay the costs of the reference.
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