9911796707
TMI Blog1991 (2) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... held that, in computing the net principal value of the estate for the purpose of the Estate Duty Act, 1953 ("the Act"), the appellant was not entitled to deduct either the estate duty payable on the estate or the amount attributable to the maintenance of the wife of the deceased. The appellant's counsel, Mr. T. A. Ramachandran, submits that the duty payable on the estate of the deceased is an encumbrance on the estate, being a first charge on the property passing on the death, and is, therefore, deductible in terms of section 44 of the Act. According to counsel, all properties passing on the death of the deceased are encumbered to the extent of the duty payable by reason of the charge created by section 74 of the Act and that duty has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying after the commencement of this Act, there shall, save as hereinafter expressly provided, be levied and paid upon the principal value ascertained as hereinafter provided of all property, settled or not settled, including agricultural land .... which passes on the death of such person, a duty called 'estate duty' at the rates fixed in accordance with section 35. " Sub-section (1) of section 5 imposes a duty upon the net principal value ascertained of "all property" which passes on the death of a person. AU properties passing on a death, other than those which are exempted from duty (see sections 21 to 33), are, for the purpose of levy under the Act, aggregated into one estate, which is the "property" on which duty is levied at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital gains are, in the specified circumstances, allowable deductions in the determination of the value of the estate for the purpose of estate duty, notwithstanding that such liabilities arose subsequent to the death. In no other case, does the Act postulate deduction or allowance for any debt or encumbrance incurred subsequent to the passing of the property upon the death. Significantly, estate duty payable on the estate of the deceased is not one of those exceptions to the general rule. Section 53 makes certain persons accountable for the whole of the estate duty on the property passing on the death. These are the legal representatives, trustees, guardians, committees or other persons in whom any interest in the property or the managem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son (other than the legal representative of the deceased) on the death of the deceased shall be a first charge on such interest: Provided that the property shall not be so chargeable as against a bona fide purchaser thereof for valuable consideration without notice..." The scheme of the Act, as the above provisions indicate, is to levy estate duty upon the net principal value of all property, as aggregated and ascertained under the Act, and which passes on the death of the person who was competent to dispose of such property at the time of his death (section 6) or which is deemed to pass on his death (sections 7 to 17). The expression "passes on the death" denotes change in the title or possession of the whole property taking place on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orily specified, the allowable deductions in the determination of the chargeable value of the estate are the debts and encumbrances incurred before the death of the deceased. Estate duty falling upon property passing upon the death had not become a debt or encumbrance until the death of the deceased, and is, therefore, not deductible. This view is consistent with the conclusion reached on the point by various High Courts: V. Pramila v. CED [1975] 99 ITR 221 (Kar), Shantaben Narottamdas v. CED [1978] 111 ITR 365 (Guj), Govind Prasad v. CED [1981] 127 ITR 642 (All), Rm. Arunachalam v. CED [1981] 132 ITR 871 (Mad), Bhavani Shankar Bagaria v. Asst. CED [1982] 137 ITR 801 (Gauhati) and CED v. Bipinchandra N. Patel [1990] 186 ITR 29 (Bom). This ..... X X X X Extracts X X X X X X X X Extracts X X X X
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