Estate duty not deductible from principal estate value; statutory charge and valuation deductions are treated separately.

Estate duty payable on a deceased's estate is not deductible in computing the principal value of the estate. The statutory scheme distinguishes the estate duty charge from deductions allowed for valuation: Section 74(1) was treated as creating a first charge only on immovable property and only after debts and incumbrances admissible under Part VI, while Section 44 was confined to debts of the deceased and incumbrances created by the deceased. A post-death statutory liability to estate duty was held not to be an encumbrance deductible for valuation, so the referred question was answered in favour of the Revenue and against the accountable person.

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Issues: Whether estate duty payable in respect of the estate of the deceased is deductible from the principal value of the estate.

Analysis: The statutory scheme was read as distinguishing the charge for estate duty from the deductions permissible in valuing the estate. Section 74(1) was treated as creating a first charge only on immovable property and only after debts and incumbrances allowable under Part VI are considered. Section 44 was construed as allowing deduction of debts of the deceased and incumbrances created by the deceased, not the statutory liability to pay estate duty. The Court also accepted the view that the passing of property on death and the liability to estate duty are not simultaneous in the manner suggested, and that a post-death statutory charge is not an encumbrance deductible in computing principal value.

Conclusion: The estate duty payable is not deductible from the principal value of the estate, and the answer to the referred question is in the affirmative in favour of the Revenue and against the accountable person.

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