Estate duty is not a deductible debt or encumbrance when computing the deceased's net principal estate value.

Estate duty payable by an accountable person is not deductible in computing the net principal value of the deceased's estate. Section 44 of the Estate Duty Act, 1953 permits deduction only for debts and encumbrances incurred by the deceased or created by a disposition made during lifetime, while section 74 merely creates a statutory first charge on property passing on death. Because estate duty arises only after death, it is not a debt of the deceased or an encumbrance created during life, and the statutory charge does not convert that liability into a deductible item. The question is therefore answered against deduction.

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Issues: Whether the estate duty payable by the accountable person is deductible in computing the net principal value of the estate of the deceased.

Analysis: Section 44 of the Estate Duty Act, 1953 allows deduction of debts and encumbrances incurred by the deceased or created by a disposition by the deceased, while section 74 creates a statutory first charge on the property passing on death. The liability to estate duty arises only after the death of the owner and is not a debt incurred by the deceased nor an encumbrance created during his lifetime. The statutory charge under section 74 does not convert that post-death liability into a deductible debt or encumbrance under section 44.

Conclusion: The estate duty payable is not deductible under section 44 of the Estate Duty Act, 1953, and the question is answered against the accountable person.

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