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TMI Blog1983 (6) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... uty payable is deductible in computing the principal value of the estate of the deceased ? 5. Whether, on the facts and in the circumstances of the case, the plea of the accountable person that any subsequent adoption should be considered to relate back to the date of death of the deceased and that the effect of the same would reduce the share of the deceased in the Hindu undivided family properties, has been properly rejected by the Tribunal ?" Shri M.A.M. Muthiah Chettiar, son of Dr. Raja Sir Muthiah Chettiar, died on January 24, 1970. In the course of determination of the principal value of the estate passing on his death, the accountable person claimed that the house property at Courtallam belonging to the HUF of which the deceased was a coparcener should be valued at Rs. 39,840 after allowing for exemption of Rs. 1,00,000 under a. 33(1)(n) of the E.D. Act. It was also claimed that in respect of household items found in Courtallam house property, the relief should be granted to the extent of Rs. 2,500 as provided in s. 33(1)(c) of the Act. This claim was rejected by the Assistant Controller. On further appeal to the Tribunal, it held that the disallowance of the claims unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on his death. We are, therefore, of the view that the Tribunal is in error in allowing the claim made in this regard. We, therefore, answer question No. 1 in the negative and in favour of the Revenue. The second question relates to a sum of Rs. 13,785 said to represent the interest accrued on fixed deposits with the Indian Bank, Ceylon, both in the individual account of the deceased and also as a member of the HUF. Before the Assistant Controller, the accountable person claimed that no interest is payable on the fixed deposits with the Indian Bank, Ceylon, on the date of death of the deceased as no interest had accrued, and that, therefore, the actual amount deposited alone should be taken into account for the purpose of determination of the principal value of the estate without adding any interest on the deposits. The Assistant Controller, however, rejected the claim and added the said sum of Rs. 13,785 to the principal value of the estate as forming part of interest accrued on the deposits till the date of death of the deceased. The matter was taken on appeal to the Appellate Controller. He held that the interest on deposits in the bank did not accrue from day to day and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recurrence about it. Since the lump-sum payment received represents the interest, it should be taken to be a receipt of recurring nature, that the interest was granted under decree of the court from the date of the institution of the proceedings in the District Court and it was calculated upon the footing that it accrued de die in diem, and, hence, it has the essential quality of recurrence which is sufficient to bring it within the scope of the Act and that the receipt cannot be taken to be of a casual and non-recurring nature. The said observations of the Supreme Court will clearly apply to the facts of this case. Wherever an amount is invested and the amount is earning interest, the interest is said to accrue from day to day, though the accrued interest is, payable on a stipulated date. We are not inclined to agree with the learned counsel for the accountable person that the interest should be taken to have accrued only when the interest is due for payment. As already stated, there is a distinction between the notion of accrual of interest and the date fixed for payment of interest to the depositor. In this view, we have to differ from the view taken by the Tribunal and hold tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which the property is situate and, therefore, the disabilities of the owner of the property in bringing the assets into India, cannot be taken into account. Aggrieved by the findings of the Tribunal in that regard, the accountable person has raised question No. 3. On due consideration of the matter, we are of the view that the Tribunal has come to the right conclusion. It is no doubt true that if the deposits in the Indian Bank, Ceylon, were to be brought into India, the accountable person will have to face restrictions and obstacles and such factors would naturally affect the value of the assets. However, it is not necessary, to sustain a charge for estate duty, that all the assets should be brought into India. The charge to estate duty will attach to an asset wherever it is situate. Therefore, at the time of determining the principal value of, the estate of the deceased, the market value of the assets, wherever it is situate, has to be determined. For enforcing charge of estate duty, the market value of the asset, wherever it is situate, has to be determined. Therefore, for the purpose of determination of the principal value of the estate, the market value of the assets in Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principal value of the estate. The court has taken the view that the expressions " debts " and " incumbrances " in s. 44 of the E.D. Act, refer to debts and incumbrances created by the deceased during his lifetime, that the liability to pay estate duty, even if it were created by statute, cannot be said to be a debt or incumbrance created by the deceased, and that, therefore, the estate duty is not deductible from the value of the estate. Similar view has also been taken by the Andhra Pradesh High Court in the decision in CED v. Omprakash Bajaj [1977] 110 ITR 263 and by the Gujarat High Court in the decision in Smt. Shantaben Narottamdas v. CED [1978] 111 ITR 365. Having regard to the principles laid down in those decisions, we hold that the estate duty payable on the estate of the deceased is not an allowable deduction under s. 44 of the E.D. Act. We, therefore, answer question No. 4 in the negative and against the accountable person. Question No. 5 relates to the plea taken by the accountable person that any subsequent adoption should be considered to relate back to the date of death of the deceased and the effect of such adoption would reduce the share of the deceased in the H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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