Estate duty deduction limited to gift tax actually paid after stamp duty adjustment, not gross gift tax payable.

For estate duty reduction under section 50A, the deductible amount is confined to the gift tax actually paid on the gifted property, not the gross gift tax payable. Where stamp duty is allowed as a deduction under section 18A of the Gift Tax Act, the gift tax paid is only the net balance after that adjustment. On that basis, the larger gross amount could not be treated as deductible under section 50A, and the claim for deduction of the full gift tax payable was rejected in favour of the Revenue.

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Issues: Whether, for the purpose of reduction of estate duty under section 50A, the amount deductible was the full gift tax payable on the gifted property or only the gift tax actually paid after deducting the stamp duty allowed under section 18A.

Analysis: Section 18A of the Gift Tax Act permits deduction of stamp duty from the gift tax payable on an instrument of gift. Section 50A of the Estate Duty Act, however, reduces estate duty only by the amount of gift tax paid in respect of the property, and not by the amount of gift tax payable. Since the gift tax actually paid was the balance remaining after allowing the stamp duty deduction, the larger gross amount could not be treated as deductible under section 50A.

Conclusion: The deduction under section 50A was confined to the gift tax actually paid, and the claim for deduction of the full gift tax payable was rejected in favour of the Revenue.

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