Interest on estate duty cannot accrue while a reducing appellate order remains operative and the reduced demand is discharged.

Interest under section 70 of the Estate Duty Act could not accrue for the period when the Appellate Controller's order reducing the estate duty remained in force and the reduced demand had been discharged. The assessee had been allowed to pay in instalments and complied with that arrangement; once the appellate order reduced the liability, no enhanced duty was payable during that intervening period. The later restoration of part of the demand by the Tribunal did not justify charging interest for a period when, under the subsisting appellate order, no further amount was due. The interest demand was therefore liable to be modified in favour of the assessee.

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Issues: Whether interest under section 70 of the Estate Duty Act, 1953 could run during the period when the appellate order reducing the estate duty remained in force and the reduced demand had been discharged.

Analysis: The petitioner had been permitted to pay the estate duty in instalments under section 70 and had complied with that arrangement. When the Appellate Controller reduced the demand, the balance payable became nominal and was promptly discharged. During the operation of that appellate order, the liability to pay the enhanced duty did not subsist, and interest under section 70 could not accrue for that period. The subsequent restoration of part of the demand by the Tribunal did not justify charging interest for the intervening period when no further amount was payable under the subsisting appellate order.

Conclusion: Interest was not payable for the period during which the Appellate Controller's order was in force; the demand for interest was liable to be modified to that extent in favour of the assessee.

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