Estate duty deduction limited to actual gift-tax paid; statutory credit under the Gift-tax Act is excluded from relief

Under section 50A of the Estate Duty Act, estate duty relief is confined to the gift-tax actually paid in respect of the property. A 10 per cent credit allowed under section 18(1) of the Gift-tax Act for prompt voluntary payment does not itself constitute gift-tax and cannot be included in the deductible amount. On that construction, only the tax actually paid was available for deduction, and the deduction was correctly limited accordingly; the referred question was answered in favour of the assessee.

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Issues: Whether, for the purpose of deduction from estate duty under section 50A of the Estate Duty Act, the amount to be deducted was the full gift-tax assessed or only the actual gift-tax paid after excluding the 10 per cent credit under section 18(1) of the Gift-tax Act.

Analysis: Section 18(1) of the Gift-tax Act granted a credit equal to 10 per cent of the amount paid where the assessee made prompt voluntary payment, and that credit did not itself constitute gift-tax. Section 50A of the Estate Duty Act allowed reduction of estate duty only by the amount of gift-tax actually paid in respect of the property. On that construction, the sum available for deduction could not include the additional amount allowed merely by way of credit.

Conclusion: Only the actual gift-tax paid was deductible, and the deduction was correctly taken at Rs. 3,200. The answer to the referred question was in favour of the assessee.

Ratio Decidendi: Under section 50A of the Estate Duty Act, the estate duty relief is limited to the amount of gift-tax actually paid, and a statutory credit allowed under section 18(1) of the Gift-tax Act does not form part of such tax paid.

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