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Issues: Whether, for the purposes of section 46(1)(b) of the Estate Duty Act, 1953, property derived from the deceased must have been acquired by the creditor before the loan transaction, or whether property acquired at any time before or after the loan can attract abatement of the debt.
Analysis: Section 46 operates as a limitation on the deduction otherwise available for debts under section 44 and is intended to prevent evasion of estate duty through non-genuine debt arrangements. The expression "at any time" in section 46(1)(b) is of wide import and does not warrant a restrictive construction confining the provision only to cases where the creditor acquired property from the deceased before the advance of the loan. The material consideration is whether the creditor at some time was entitled to, or had among resources, property derived from the deceased, subject to the proviso and the requirement of a nexus between the debt and the property derived. The earlier view taking the broader construction was approved, and the contrary restrictive observations were overruled.
Conclusion: Section 46(1)(b) applies even where the creditor derived property from the deceased after the loan transaction, provided the statutory nexus and proviso are satisfied; the broader interpretation is upheld in favour of Revenue.
Ratio Decidendi: The phrase "at any time" in section 46(1)(b) of the Estate Duty Act, 1953 includes property derived from the deceased either before or after the loan transaction, subject to the proviso and the requisite nexus, and the provision must be construed to prevent evasion of estate duty.
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