Estate duty on a deceased coparcener's share is not a deductible debt of the continuing Hindu undivided family.

Under the Wealth-tax Act, a liability can be deducted only if it is a debt owed by the assessee. Applying the notional partition under the proviso to section 6 of the Hindu Succession Act, the deceased coparcener's 1/3rd share was carved out notionally, and the estate duty on that share was treated as a charge on the deceased's estate under the Estate Duty Act, not as a liability of the continuing HUF. Because the debt belonged to the heirs of the deceased coparcener and not to the assessee-HUF, it could not be deducted from the HUF's net wealth. The rectification withdrawing the earlier allowance of that deduction was therefore valid.

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Issues: Whether the Wealth-tax Officer was justified in rectifying the assessment under section 35 of the Wealth-tax Act and withdrawing the deduction of estate duty liability originally allowed; and whether the estate duty attributable to the deceased coparcener's undivided 1/3rd share could be deducted from the net wealth of the Hindu undivided family.

Analysis: On the death of the coparcener, a notional partition had to be assumed under the proviso to section 6 of the Hindu Succession Act, 1956, with the deceased's share being carved out notionally. The estate duty payable on that share was a first charge under section 74 of the Estate Duty Act, 1953, but the liability was not that of the continuing Hindu undivided family. Under section 2(m) of the Wealth-tax Act, 1957, only debts owed by the assessee and eligible deductions from the assessee's own net wealth can be taken into account. A liability belonging to the heirs of the deceased coparcener, even if discharged by the Hindu undivided family, does not become a deductible debt of the assessee.

Conclusion: The rectification was valid, and the estate duty liability relating to the deceased coparcener's 1/3rd share was not deductible from the net wealth of the assessee-Hindu undivided family.

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