Legally recoverable debt at death remains part of the estate, despite later write-off or recovery difficulties.

A legally recoverable debt existing on the date of death forms part of the deceased's estate for estate duty purposes and passes to the heirs immediately on death. The deduction provisions do not permit exclusion of such a debt merely because it is later treated as irrecoverable, the debtor is not traced, no recovery action is taken, or the amount is subsequently written off as a bad debt. The relevant test is the debt's character at the date of death, not later recovery difficulties. Accordingly, the debt remained includible in the principal value of the estate and taxable as part of the deceased's property.

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Issues: Whether the sum of Rs. 21,340 due from the deceased's accountant was liable to be excluded from the principal value of the estate for estate duty purposes on the ground that it was written off later as a bad debt.

Analysis: The amount due from the accountant was an ascertained and legally recoverable debt existing on the date of death. Under the definition of property and property passing on death, such a debt formed part of the deceased's estate and passed to the heirs immediately on death. The charging provision subjected the principal value of the estate to estate duty, and the deduction provisions did not authorise exclusion of a debt merely because it was later treated as irrecoverable or written off. Subsequent difficulty in recovery, non-tracing of the debtor, absence of litigation, and a later write-off could not alter the character of the debt as property passing on death.

Conclusion: The amount of Rs. 21,340 could not be excluded from the principal value of the estate and was rightly includible for estate duty purposes.

Final Conclusion: The reference was answered against the accountable persons and the debt was held taxable as part of the deceased's estate.

Ratio Decidendi: A debt that is legally recoverable on the date of death remains part of the principal value of the estate for estate duty purposes, and it cannot be excluded merely because it is later written off or becomes difficult to recover in practice.

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