Estate duty deduction requires a subsisting liability; quashed excise demand and penalty could not reduce the taxable estate.

Excise duty and penalty that were later quashed in appeal, and were never paid by the deceased or from the estate, did not constitute a subsisting liability deductible as a debt in computing the principal value of the estate under the Estate Duty Act, 1953. A deduction under section 44 is available only for amounts actually payable by the deceased or enforceable against the estate; read with sections 5, 2(15) and 2(16), the duty is on property passing on death after real debts and encumbrances. A liability that has ceased to exist does not reduce the estate's principal value.

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Issues: Whether the amount of excise duty and penalty, which had been disallowed by the tax authorities but was later quashed in appeal and never paid by the deceased or out of his estate, could still be deducted as a debt in computing the principal value of the estate under the Estate Duty Act, 1953.

Analysis: Allowance for debts under section 44 is available only where the amount claimed is in truth payable by the deceased or constitutes a subsisting liability affecting the estate. Read with section 5 and the definitions of property and property passing on death in sections 2(15) and 2(16), the levy is on the principal value of property actually passing on death after accounting for real debts and encumbrances. Where the demand itself has been set aside and no payment was made by the deceased during lifetime or from the estate after death, the alleged liability does not survive as a charge on the estate and cannot be treated as a deductible debt.

Conclusion: The deduction was not allowable under section 44 of the Estate Duty Act, 1953, and the answer to the reference was against the accountable person.

Ratio Decidendi: A deduction as a debt in estate duty computation is permissible only for a subsisting liability actually payable by the deceased or enforceable against the estate; a liability that has ceased to exist cannot reduce the principal value of the estate.

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