Estate duty on gifts and loan disallowance operate separately; no double addition arises where the same funds are traced back as a loan.

An immediate gift inter vivos made within two years before death is deemed to pass on death under section 9 of the Estate Duty Act, but that deeming provision does not invalidate the gift itself. Debts may ordinarily be allowed under section 44, yet section 46(1) withdraws that allowance where the borrowing relates to property derived from the deceased. On the facts, the gifted amount was later advanced back to the deceased as a loan, so inclusion under section 9 and disallowance of the corresponding liability under section 46(1) both applied. The court held that these operate on different legal planes and do not amount to impermissible double addition; the anti-aggregation rule in section 34(5) was not violated.

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Issues: Whether the amount of Rs. 20,000 gifted by the deceased within two years before death could be included under section 9 of the Estate Duty Act, 1953 and, in addition, whether the corresponding loan liability claimed by the accountable person could be disallowed under section 46(1) so that there was no impermissible double addition.

Analysis: Property disposed of by way of an immediate gift inter vivos within two years before death is deemed to pass on death under section 9, but the validity of the gift is not destroyed by that provision. Section 44 permits allowance for debts, while section 46 abates that allowance where the borrowing is in relation to property derived from the deceased. On the facts found by the authorities, the very same amount gifted by the deceased was advanced by the daughter as a loan to the deceased, so both section 9 and section 46(1) were attracted. The additions operate on different legal planes: one is inclusion of property deemed to pass, and the other is denial of a debt allowance. The prohibition in section 34(5) against aggregation more than once did not apply, because the property was not aggregated twice and duty was not levied twice on the same property in the statutory sense. Administrative practice or foreign commentary could not override the express provisions of the Act.

Conclusion: The inclusion under section 9 and the disallowance under section 46(1) were independent and legally sustainable, and the contention of double assessment was rejected. The questions were answered in the negative and against the accountable person.

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