KASHMIRI LAL TALWAR Vs. CONTROLLER OF ESTATE DUTY

JUDGEMENT

(1.) THIS is a reference made by the Income-tax Appellate Tribunal (for short, "the Tribunal")under Section 64 (1) of the Estate Duty Act, 1953 (for short, "the Act"), seeking the opinion of this court on the following question of law :

(2.) PANNA Lal Talwar of Amritsar died on December 14, 1975, leaving behind certain estate. His legal heir, Kashmiri Lal Talwar, filed the account of the estate duty in the status of an accountable person in response to the notice issued by the Assistant Controller of the Estate Duty, Amritsar, under Section 58 (2) of the Act. Deduction on account of liability of the estate duty was claimed by the accountable person from the principal value of the estate on the plea that it was in the nature of a charge on the estate of the deceased. However, the Assistant Controller of Estate Duty took the view that the amount of estate duty payable under the Act was neither a debt nor an encumbrance within the ambit of Section 44 of the Act. The Assistant Controller, therefore, refused to allow deduction of the estate duty liability from the value of the estate. The Appellate Controller of Estate Duty rejected the appeal filed by the accountable person and so did the Tribunal.

(3.) SHRI R. P. Sawhney, senior advocate and counsel for the Department, has argued that Section 74 of the Act merely creates a charge on the property forming part of the estate of the deceased, but that alone will not create a legal presumption to the effect that the estate duty liability would form part of the debt within the meaning of Section 44 of the Act. Liability to estate duty arises on the death of the owner of the property and, therefore, the charge, if any, comes into force after the death only. No such charge exists at the time of the death.