Estate duty is not a deductible debt in valuing the estate, as deductions are limited to statutory debts and encumbrances.

Estate duty payable by the accountable person is not deductible in computing the net principal value of the estate under the Estate Duty Act, 1953. The charging and valuation scheme taxes property passing on death at open market value, while deductions are confined to debts and encumbrances specifically allowed by the statute. Because the provision creating the first charge places estate duty after those allowable deductions, the liability does not become a deductible pre-death debt or encumbrance. The question was answered against the accountable person and in favour of the Revenue.

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Issues: Whether estate duty payable by the accountable person is deductible in computing the net principal value of the estate of the deceased under the Estate Duty Act, 1953.

Analysis: The charging provision taxes property passing on death, and valuation of the estate is made at its open market price at the time of death. Deductions are confined to debts and encumbrances within the deduction provision. The provision creating the first charge expressly places estate duty after the debts and encumbrances allowable under the deduction provisions. This legislative arrangement shows that estate duty itself is neither a debt nor an encumbrance deductible in determining the value of the estate. The statutory charge on the property does not convert the future estate duty liability into a deductible pre-death liability.

Conclusion: Estate duty payable by the accountable person is not deductible in computing the net principal value of the estate; the question was answered against the accountable person and in favour of the Revenue.

Ratio Decidendi: Estate duty payable on property passing on death is not a deductible debt or encumbrance for the purpose of valuing the estate when the charging and charge provisions place such duty after the allowable deductions.

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