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TMI Blog1980 (11) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal, Allahabad. However, the, Income-tax Appellate Tribunal has, at the instance of the accountable person, stated the case and has referred the following question for the opinion of this court: " Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the estate duty payable on the estate of the deceased could not be deducted while computing the value of the estate for levy of estate duty ? Section 5(1) of the Act lays down that in the case of every person dying after the commencement of the Act, there shall be levied and paid upon the principal value of the property ascertained in the manner provided in the Act, which passes on the death of such person, a duty called estate duty, at the rate fixed in accordance with s. 35 of the Act. Section 6 of the Act lays down that the property which the deceased was at the time of his death competent to dispose of shall be deemed to pass on his death. Sections 7 to 17 of the Act describe certain other properties and the circumstances in which they would also be deemed, for purposes of the Act, to pass on the death of the deceased. Section 36 of the Act provides that the principal value of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charge for its enforcement ...... What is required to be done for the ascertainment of such market value is to ascertain the price which a willing purchaser would pay for the property which is burdened with the liability to pay the estate duty. It being clear that no willing purchaser would pay a price which refuses to take into account the liability on the property, it should necessarily follow that the estate duty payable in respect of the property must necessarily be deducted from the market value at death. " After carefully considering the aforementioned observations made by the learned judges of the Mysore High Court as also the submissions made in this regard by the learned counsel appearing for the accountable person, we are of opinion that the aforementioned observations which had been made in connection with the amount of court-fees payable on an application for probate under the Mysore State Court-Fees Act do not offer correct clue for determining the principal value of the property passing on the death of the deceased, as required by the Act. Section 5(1) of the Act, which is the charging section, lays down that there shall be levied and paid upon the principal val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as a result of his death. The obligation like the charge created by s. 74 of the Act can possibly not be considered to be an obligation which came to be attached to the property of the deceased while he was alive. Such an obligation came to be attached to the property only as a result of the death of the deceased and got attached not to the property as it passed on the death of the deceased but to the property as it came to be vested in the hands of the heirs and legal representatives of the deceased. So far as the case of Mrs. Blanche Nathalia Pinto v. State of Mysore [1964] 53 ITR (ED) 64 (Mys) is concerned, we find that in that case the question that arose for consideration was with regard to the amount of court-fees payable under s. 53 of the Mysore Court-Fees and Suits Valuation Act, 1958, on an application made by an executor for obtaining the probate of a will left by the deceased. Section 53 of the Mysore Court Fees and Suits Valuation Act ran thus : " 53. Levy of fees.-(i) 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 I, computed (a) where the application is m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed persons. It is true that at one place the learned judges made the following observations (p. 70): " 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 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 Court-Fees and Suits Valuation Act. " Aforementioned observation of the learned judges does support the case of the accountable person that in the opinion of the learned judges the liability for payment of estate duty gets attached to the property of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t or incumbrance for which an allowance is made shall be deducted from the value of the property liable thereto. " Learned counsel for the accountable person contended that the estate duty is either a debt or an encumbrance on the estate which came to be attached to the estate on the death of the deceased. It is not a debt or an encumbrance which falls in any of the cls. (a) to (d) of s. 44. Accordingly, the accountable person was entitled to have the amount of estate duty deducted while determining the taxable value of the estate left by the deceased. We find no merit in this submission of the learned counsel. Section 74(1) of the Act which makes the estate duty a charge on the immovable properties left by the deceased runs thus : " 74. (1) Subject to the provisions of section 19, the estate duty payable in respect of property, movable or immovable, passing on the death of the deceased, shall be a first charge on the immovable property so passing (including agricultural land) in whomsoever it may vest on his death after the debts and incumbrances allowable under Part VI of this Act; and any private transfer or delivery of such property shall be void against any claim in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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