Income Tax Appellate Tribunal - Bangalore
Assistant Controller Of Estate Duty vs Mrs. Lily D. Silva on 5 March, 1992
Equivalent citations: [1992]41ITD276(BANG)
ORDER
A.V. Balasubramanyam, Judicial Member
1. These cross appeals arise out of the estate duty assessment of the deceased whose name was Lily D' Silva. There is one ground in each of these appeals.
2. The prefactory facts are: Lily D' Silva died leaving behind a dutiable estate. The principal value of the estate was determined at Rs. 16,24,414 by the Assistant Controller and there is no dispute in regard to this. A property on which estate duty was leviable had been sold within a period of two years from the date of death for Rs. 5,00,000 and it was claimed that the accountable person had paid Rs. 4,90,105 towards estate duty on the assessment. A deduction under Section 508 was claimed. The accountable person had incurred an expenditure of Rs. 94,497 in connection with stamp duty payable on the Succession Certificate which had to be obtained. In respect of the same, relief under Section 50 was also claimed. The Assistant Controller granted relief allowable under Section 50 and there is no dispute in regard to that. The present dispute is only in regard to the relief to be allowed under Section 50B.
3. The ground raised by the revenue, in it's appeal, is about the formula to be applied for working out the relief. The Assistant Controller, as we see, had adopted the following arithmetical formula to fix the relief to be granted under Section 50B:
x = m (n - x)
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P m = the tax on capital gains paid.
n = the amount of estate duty paid out of the sale proceeds p = sale proceeds on the transfer of the property.
x = the relief allowable under Section 50B.
This has been objected to by the accountable person and the Appellate Controller held that the correct formula to be taken is :
x = m x n
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P The revenue is objecting to the change made by the Accountable Controller.
4. The formula taken by the Assistant Controller is the one given by Chaturvedi on Estate Duty (1973 Edn. p. 588). The formula substituted by the Appellate Controller is the one suggested by the learned author Nanavati in his treatise on Estate Duty.
5. There is no justification to adopting the formula taken by the Assistant Controller since on a plain reading of Section 50B the formula to be employed is the one which is suggested by the Appellate Controller. There is no reason why the amount of estate duty paid out of the sale proceeds is to be reduced by anything, for the language in Section 50B states that estate duty shall be reduced by the sum which bears to the total amount of tax so paid the same proportion as the amount paid towards estate duty out of the proceeds of the transfer bears to be gross proceeds of such transfer. The formula mentioned by the learned author Nanavati accords more appropriately to the language in Section 50B. The view of Nanavati is also supported by the learned authors V. Balasubramanyan in his book on Estate Duty and O.P. Chopra in his book on Estate Duty. We agree with the view expressed by the learned author Nanavati to uphold the order of the Appellate Controller of Estate Duty who has directed the Assistant Controller to adopt the formula : x = mn for ascertaining the relief to be allowed under P section 50B. We find no merit in the ground raised by the revenue in its appeal and it is dismissed.
6. Taking up the appeal by the accountable person, the ground is in regard to the figure to be adopted towards estate duty paid out of the sale proceeds while calculating the relief under Section 50B. To repeat, the assessee had paid Rs. 4,90,105 out of the sale proceeds towards estate duty and this is what the Appellate Controller mentions in his order. However, the Assistant Controller's order passed under Section 61, dated 21-12-1988, says that the estate duty paid on the principal value was Rs. 4,84,207. The Appellate Controller has deducted Rs. 94,497 paid towards stamp duty for obtaining Succession Certificate and the balance of Rs. 3,89,710 was taken as the duty paid out of the sale proceeds. Shri Leslie D'Silva contended that deduction under Section 50B is to be given on the duty payable on the principal value and that deduction given under any other provisions of the Estate Duty Act is not required to be deducted. The question, therefore, is, what is the 6xact meaning of the expression "estate duty payable" found in section SOB.
7. The duty leviable on the principal value of the estate of the deceased ascertained in the manner provided in the Estate duty Act is "estate duty", payable at the rate fixed in accordance with Section 35; vide Section 5. The authority has to assess the principal value of the estate of the deceased to determine the amount payable as estate duty; vide Section 58. The estate duty, therefore, payable is determined immediately after the principal value of the estate is determined under Section 58.
8. Part VI of the Estate Duty Act deals with deductions. Sections 44 to 49 deal with allowance to be given from the value of the property in certain cases. The effect of these provisions is to reduce the principal value of the property. Sections 50 to 50B deal with reduction of the duty. They are provisions whereby estate duty leviable under the Act is reduced.
9. The words "estate duty payable" are to be found in all these provisions and they all operate parallelly. The words "estate duty payable" have to be, therefore, given the same meaning while interpreting Sections 50 to 50B.
10. As pointed out by the Karnataka High Court in Mrs. Ethel Rodrigues v. Asstt. Controller of Estate Duty AIR 1964 Mys. 202, operation of Section 50 comes after the estate duty is determined. This comment holds good equally to Section 50B, for they all deal with deductions to be allowed on the estate duty payable. When once the principal value of the estate is determined by an assessment made under Section 58, the estate duty payable is also determined. If that is the case, it would be incorrect to say that the estate duty payable is different from what once determined by the assessment made merely because reliefs under Sections 50, 50A and 50B are to be given at different stages post-assessment.
11. On an assessment made under Section 58 the accountable person may seek relief under section SOB earlier and in that event the "estate duty payable" would be the amount that is originally fixed. For some reason, a probate proceeding may get delayed and a person entitled to relief under Section 50 may laterelly make a claim. In that event the deduction will have to be allowed on the estate duty payable after giving relief under section SOB. Then the "estate duty payable" regarded for Section 50B would be different from what it is if relief under Section 50 should be first granted. Then the expression "estate duty payable" would have different meanings depending upon the order in which reliefs under Sections 50 & 50B are to be allowed. This could not be the legislative intent. A fair reading of Section 50B, and in the context of Sections 50 and 50A, would not justify different meaning to be given to the expression "estate duty payable" merely because a relief under Section 50 is first granted. Shri Leslie D' Sliva was right in contending that for the purpose of Section 50B, "estate duty payable" is the amount that is determined upon an assessment under Section 58 whereby the principal value of the estate is fixed.
12. For the foregoing, we hold that the authorities below were not correct in deducting Rs. 94,497 paid towards stamp duty for obtaining succession certificate from the estate duty determined at Rs. 4,94,207. For working out the relief allowable under Section 50B "estate duty payable" shall be the duty payable on the principal value of the estate as per the assessment made under Section 58 without deducting therefrom the relief allowed under Section 50. The, Assistant Controller shall accordingly work out and give relief to the accountable person.
13. In the result, the appeal by the revenue (EDA No. 1 l/Bang./1980) is dismissed. The appeal by the accountable person (EDA No. 12/Bang./1989) is allowed.