Bombay H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the gift-tax of Rs. 1,26,213 payable as per assessments completed after the death of the deceased is an allowable debt against the estate of the deceased under s. 44 of the ED Act, 1953 ?

T. D. SUGLA, J. :

There is only one question of law involved in this reference. The question reads thus :

“Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the gift-tax of Rs. 1,26,213 payable as per assessments completed after the death of the deceased is an allowable debt against the estate of the deceased under s. 44 of the ED Act, 1953 ?”

It is fairly stated by Shri Jetley, learned counsel for the Department, that there are many decisions including the latest one of the Supreme Court in the case of CWT vs. K. S. N. Bhatt (1984) 145 ITR 1 (SC), wherein the context of wealth-tax proceedings, it was held that liability towards wealth-tax, income-tax and gift-tax which crystallise on the relevant valuation date are to be deducted from the wealth even though the assessment orders are finalised after the valuation date. It was, however, pointed out that there was no direct decision under the ED Act on the question.

In our opinion, the ratio of the decision is squarely applicable in the case of determination of the principal value of the estate for estate duty purposes. We uphold the order of the Tribunal that the liability to gift-tax in respect of gifts made by the deceased during his lifetime was deductible from the principal value of the estate. Accordingly, we answer the question in the affirmative and in favour of the accountable person.

No order as to costs.

[Citation :185 ITR 654]