Beneficial construction of estate duty rebate provision upheld where borrowing was raised solely to pay duty and later repaid by sale proceeds.

Section 50B of the Estate Duty Act was construed to allow rebate where estate duty was first paid from borrowing raised exclusively for that purpose and the borrowing was later repaid from sale proceeds of estate property within two years of death. The Court accepted a beneficial construction in favour of the accountable person, noting that the transfer was made solely to discharge the estate-duty borrowing and that the statutory link between transfer proceeds and duty payment was satisfied. Because the Act had been repealed, the dispute was treated as sterile and academic, so the High Court's chosen view was left undisturbed. No interest was payable on the rebate or refund.

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Issues: Whether rebate under section 50B of the Estate Duty Act, 1953, was available where estate duty was first paid out of borrowed funds taken exclusively for that purpose and the borrowings were later liquidated by sale of estate property within two years of death, and whether the question warranted interference when the statute had been repealed.

Analysis: Section 50B granted reduction of estate duty where property was transferred within two years of the death and tax on capital gains from such transfer had been paid, the reduction being linked to the amount of duty paid towards estate duty out of the proceeds of transfer. The Court accepted that the construction favouring the accountable person was a plausible one and that the borrowing was taken exclusively to meet the estate duty demand, with the subsequent transfer of shares also made solely to discharge that borrowing. As the Estate Duty Act, 1953 had already been repealed, the dispute had become sterile and academic, and where the High Court had adopted one of two possible views that did not offend justice, interference was unwarranted.

Conclusion: The rebate claim was upheld, the appeal was not interfered with, and the contention that no rebate was available was rejected. No interest was payable on the rebate or refund.

Ratio Decidendi: A plausible beneficial construction of a repealed fiscal provision, especially where the High Court has adopted one of two possible interpretations and the dispute has become academic, need not be disturbed in appeal; in such a case, a transfer made to discharge a borrowing exclusively raised for estate duty may satisfy the statutory link between the transfer proceeds and payment towards estate duty.

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