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TMI Blog1964 (3) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... he opinion that the value of the estate was ₹ 99,750.16 nP. In reaching the conclusion, the District Judge altered the value of many of the items of properties which belonged to the deceased and was of the view that ₹ 1,05,592 was the value of those items. From this, he deducted a sum of ₹ 5,841.84 nP., which represented allowable deductions and deduced the net value of the estate to be ₹ 99,750.16 nP. It was on this basis that the petitioner was called upon to amend her valuation and to pay the deficient court-fee, and, in doing so, the District Judge recorded a finding which was not sought by the State in its application. When the petitioner estimated the value of the estate, she deducted from that value a sum of ₹ 30,000 which had been paid towards the estate duty payable in respect of that estate. That this was a legitimate deduction claimable by the petitioner was not disputed by the State. But the District Judge nevertheless thought that that deduction was an illegitimate deduction and that he had the power to disallow it in the exercise of the power conferred on him by section 57 of the Mysore Court-Fees and Suits Valuation Act, In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o to the estate duty authorities. This part of the evidence given by the clerk was not subjected to any cross-examination. All that was elicited in the cross-examination of this witness was that, in the year 1943, a sum of ₹ 21,014 was paid to a certain Gillant Pinto and that there was a sale deed in 1944. On this part of the testimony, the argument constructed by Mr. Government Pleader was that the sale deed referred to by the clerk was the sale deed under which item 3 was purchased, and that if in the year 1944, item 3 was purchased for ₹ 21,014 it was surely three times as valuable in the year 1960. But of that there is no evidence. The evidence given by the witnesses was that in the years 1958 and 1959 improvements were made to the property which was fetching only a rent of ₹ 96 a month. It is clear that the rents realised after such improvements can have no relevance since the estate to be valued for court-fee is the estate left by the deceased and in the condition in which he left it, and not what it became after it was improved by his heirs. Since higher rents were paid only after improvements, we should assume that if no improvements had been made, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nistration.--(1) Every application for the grant of probate or letters of administration shall be accompanied by a valuation of the estate in duplicate in the form set forth in Part 1 of Schedule III. Section 53 states that the fee chargeable for the grant of probate is the fee prescribed by article 6 of Schedule 1 computed in manner specified in clauses (a) and (b) of sub-section (1) of that section. The relevant part of section 53 is: 53. Levy of fees.--(1) The fee chargeable for the grant of probate or letters of administration shall comprise-- A fee at the rate or rates prescribed in article 6 of Schedule 1, computed-- (a) where the application is made within one year of the date of death of the deceased, on the market value of the estate on such date; or (b) where the application is made after the expiry of one year from such date on the market value of the estate on the date of the application:... Since clause (b) is the clause applicable to the case before us, the courtfee which the petitioner was required to pay was that payable on the market value of the estate on the date of the application. Although the word estate occurring in section 53 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... state. It is not disputed that the estate duty paid by the petitioner was that payable in respect of the estate which came or was likely to come to her hands. But the more important question is what was the market value on August 16, 1960, of the estate which came into her hands. It is in the determination of this question that the provisions of the Estate Duty Act become relevant. Section 2(7) defines estate duty as the estate duty under the Act. Section 5 which is the charging section states that in the case of every person dying after the commencement of the Act, a duty called estate duty at the rates fixed in accordance with section 35, shall be exigible in respect of all property which passes on the death of such person. The expression property passing on the death is defined by section 2(16) of the Act, and, section 16 declares that property which the deceased was at the time of his death competent to dispose of shall be deemed to pass on his death. The Second Schedule to the Act prescribes the rates of the estate duty. Section 74(1) reads: 74. Estate duty a first charge on property liable thereto.--(1) Subject to the provisions of section 19, the estate d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determination of the market value of the estate which has come or was likely to come into the hands of the executor and I have no doubt in my mind that when it comes to the hands of the executor it is an estate which is already burdened with the liability to pay the estate duty. That, in my opinion, is the clear meaning of the reference to property which passes on the death of the deceased, contained in the charging section which is section 5 of the Act. The scheme of the Estate Duty Act and of its provisions makes it clear that immediately on the death of a person, estate duty becomes exigible in respect of his property which passes on his death. The liability comes into being even before it passes and what brings into existence that liability is the death of the person to whom the property belongs. In that situation, to whomsoever the property may pass, the property which so passes is the property on which the liability for the payment of estate duty had already become fastened, and it is that property with the burden whose market value has to be determined under the provisions of section 53 of the CourtFees and Suits Valuation Act. When the market value is so determined, it be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and efficacy of the probate necessary for his action, out of the estate while it is in bulk, and before distribution or administration has commenced'. It is thus clear that the property which vests in the executor for distribution or administration is a property which is burdened with the liability to pay estate duty, and it is the market value of that property which should constitute the basis for the computation of the court-fee payable under section 53 of the Act. It is difficult to understand how the determination of such market value can discard or ignore the liability on the property or how the determination of the market value can refuse to take into account that liability or the charge for its enforcement. It is seen from section 44 of the Estate Duty Act that even in the determination of the estate duty, incumbrances on the property created by the deceased cannot be excluded from consideration. Although that section of the Estate Duty Act has really no relevance to the computation of the court-fee payable on an application for the grant of a probate, there is implicit in section 53 the duty to exclude from the market value of the estate at the time of the death ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estate:... Mr. Shirgurkar very forcefully contended before us that if sub-section (2) of section 53 specified the only deductions to be made from the value of the estate and those deductions were of the amounts which represented the debts of the deceased, it was impossible for the petitioner to sustain the contention that the estate duty which was not a debt payable by the deceased could be deducted from such value. But this submission overlooks the provisions of section 53(1) which contain the plainest indication that the deductions to be made under sub- section (2) are the further deductions to be made from the market value of the estate which has come or was likely to come to the hands of the executor and that that estate is an estate burdened with the liability to pay the estate duty. It is thus clear that the first step to be taken in the determination of the market value for the purpose of section 53(1) is to deduct from the value of the estate the estate duty payable and the second is to make the further deductions authorised by section 53(2). That section 53(2) authorises the second, does not mean that there can be no other. In my opinion, when an executor app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herwise be available to him during the enquiry. But since the petitioner has succeeded in this revision petition on other grounds, it is really not necessary, in my opinion, for us to say anything about this matter in this revision petition. Before concluding, I should refer to one matter. It is seen from the provisions of section 56(5) of the Court-Fees and Suits Valuation Act, that the only person who can seek an enquiry into the true value of the estate is the Deputy Commissioner. But, by some inadvertence, as I consider it to be, the application was presented by the State represented by the Deputy Commissioner. What the Deputy Commissioner should have done was to make an application in his own name and not as the representative of the State. But it is however clear that, in substance, the application is one made by the Deputy Commissioner, and so was not liable to be rejected by the District Judge on that ground. This revision petition is allowed and the order made by the District Judge is set aside to the extent indicated. The only amendment which the petitioner should now make of the valuation is to alter the valuation from ₹ 44,064.16 nP. to ₹ 46,064.16 nP. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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