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TMI Blog1986 (6) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 payable on the estate duty cannot be deducted out of the property income ? 2. Whether, on the facts and in the circumstances of the case, the assessee was entitled to deduction of interest of Rs. 3,960 from her income either under the head ' Business ' or under the head ' Other sources ' ? " The assessee is an individual and a co-widow of late Sri K. Gururajachar. Gururajachar died on February 9, 1969, leaving behind the assessee and the other widow, Smt. Bhoomiamma, with extensive business and large properties. However, the assessee and the other widow could not pay estate duty payable in respect of the estate of Sri Gururajachar. They obtained annual instalments for payments of the same subject to payment of interest. For the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irm, viz., P. Vadiraja Rao, B. Ratnakara Rao and P. N. V. Upadhyaya, were Rs. 1,45,182. On the death of Shri Gururajachar, what was done was the transfer of all the above assets and liabilities in equal portions to the widows of the deceased, viz., the assessee and Smt. Bhoomiamma. Immediately, thereafter, a fresh partnership was formed with these two widows as partners with a capital of Rs. 20,000 each, the other partner being Vadiraja Rao and three nieces of the assessee. In the new firm's books, the capital account of each of the two ladies was shown at Rs. 20,000 each, that of Vadiraja Rao at Rs. 10,000 and the three nieces at Rs. 5,000 each. The liabilities of the old firm to Vadiraja Rao and two others were taken over by the two ladie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat it was only by the lease of Neo Mysore Cafe building that the liabilities of the three persons could have been met. So far as the first question is concerned, it hardly poses any problem for answering it. Section 24(1)(iv) of the Act envisages deduction of an annual charge from the income from property. Section 27(iv) defines " annual charge " to mean a charge to secure an annual liability, but does not include any tax in respect of property or income from property imposed by a local authority or the Central or a State Government. The assessee claimed deduction of Rs. 2,000 which represents the interest payable on the instalments of the estate duty payable. First of all, the estate duty cannot be regarded as an annual charge. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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