Estate duty credit for foreign debts under section 47 does not depend on Indian domicile, and deficit set-off applies in computation.

Section 47 of the Estate Duty Act, 1953 was construed as operating in two parts: the first limits allowance of debts due to persons resident outside India against foreign property, while the latter part allows repayment or adjustment of estate duty without importing the domicile restriction found earlier in the section. The expression "repayment of estate duty" was treated as a computation mechanism, not as requiring prior payment followed by a separate refund claim. On the stated facts, where foreign debts exceeded foreign assets, the deficit was to be given effect in calculating the estate duty liability.

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Issues: Whether section 47 of the Estate Duty Act, 1953, applied to foreign debts due to persons resident outside India so as to permit credit or adjustment against the estate duty otherwise payable on the Indian estate, even though the deceased was domiciled outside India.

Analysis: The provision was read as containing two distinct parts. The first part regulates the initial allowance of debts due to persons resident out of India against foreign property on which estate duty is paid. The latter part, dealing with repayment of estate duty in respect of such debts, does not use the restrictive words found in the first part and therefore does not import a requirement that the deceased must have had an Indian domicile. The expression "repayment of estate duty" was construed as a mechanism of credit or adjustment while computing the duty payable on the estate, and not as requiring prior actual payment followed by a separate refund claim. On the facts, the foreign debts exceeded the foreign assets, so the deficit had to be given effect in computing the duty liability.

Conclusion: Section 47 was applicable to the facts of the case, and the Tribunal was right in applying it. The question was answered in favour of the accountable person and against the Department.

Ratio Decidendi: For the purposes of the latter part of section 47 of the Estate Duty Act, 1953, entitlement to credit or adjustment in respect of foreign debts does not depend on the deceased having an Indian domicile; the provision operates as part of the computation of estate duty by allowing the deficit on such debts to be set off in the manner contemplated by the section.

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