Hire purchase liabilities under estate duty law were not separately deductible from an exempt house's estate value.

Under the Estate Duty Act, unpaid instalments under a hire purchase arrangement for a house claimed as exempt residential property were not separately deductible as a debt from the estate. The deceased was treated as only a tenant until all instalments were paid and a conveyance executed, so the property was not fully owned for exemption purposes; however, the unpaid instalments were still a liability of the deceased. Because section 44 permits deduction only of debts and incumbrances from the value of the property liable thereto, and the house had already been valued at the full agreed price, the claimed separate deduction was disallowed.

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Issues: Whether the unpaid instalments under a hire purchase tenancy arrangement in respect of a house claimed as exempt residential property under section 33(1)(n) of the Estate Duty Act, 1953, could be deducted as a debt from the estate under section 44 of the Act.

Analysis: The deceased was held to be only a tenant under the hire purchase agreement until all instalments were paid and a conveyance deed executed, so the house did not fully belong to him for the purpose of exemption. At the same time, the unpaid instalments represented a liability of the deceased. Under section 44, debts and incumbrances allowable in determining the value of an estate are to be deducted from the value of the property liable thereto. Since the authorities had valued the house at the full agreed price, the unpaid amount could not be deducted separately from the estate when it related to the exempted house in the manner claimed.

Conclusion: The question was answered in the negative and against the accountable person. The unpaid instalments were not separately deductible from the value of the estate in the manner claimed.

Final Conclusion: The reference was decided in favour of the Revenue, and the claimed deduction of the unpaid instalments was disallowed.

Ratio Decidendi: Under the Estate Duty Act, a liability linked to a hire purchase arrangement for a house cannot be separately deducted from the estate unless it is deductible from the value of the property liable thereto in accordance with section 44.

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