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Interpretation of section 44 of the Estate Duty Act regarding the deductibility of estate duty payable by the accountable person in computing the net principal value of the deceased's estate. Analysis: The case involved the question of whether estate duty payable by the accountable person should be deductible in determining the net principal value of the deceased's estate under section 44 of the Estate Duty Act. The accountable person had claimed a deduction for estate duty, but the Assistant Controller, the Appellate Controller, and the Appellate Tribunal all disallowed the claim, stating that estate duty is not a debt or encumbrance within the scope of section 44. The main issue was whether estate duty should be considered for deduction under the Act. The court analyzed the relevant provisions of the Act, particularly section 44, which allows for deductions in determining the estate value for estate duty purposes. It was noted that estate duty is charged on property passing upon death, and section 74 establishes that estate duty is a first charge on the property passing on the deceased's death. The court compared the Act with the UK Finance Act of 1894, highlighting that estate duty was not considered a deductible item in the UK practice. The court emphasized that debts and encumbrances allowable under the Act take precedence over estate duty, indicating that estate duty is not categorized as a debt or encumbrance under section 44. The court considered the arguments presented by both parties, including the contention that estate duty is a capital levy similar to wealth tax. However, the court held that estate duty payable on the deceased's estate does not fall under section 44 for deduction purposes. The court rejected the accountable person's claim for deduction of estate duty and answered the question in the negative, ruling in favor of the department. The accountable person was ordered to pay the costs of the department, including advocate's fee. In conclusion, the judgment clarified that estate duty payable by the accountable person is not deductible under section 44 of the Estate Duty Act. The court's decision was based on the specific provisions of the Act, the precedence of debts and encumbrances over estate duty, and the historical practice regarding estate duty deductions. The ruling provided clarity on the treatment of estate duty in computing the net principal value of a deceased individual's estate for estate duty purposes.
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