Law:

Section:

Section 44, read with section 33, of the Estate Duty Act, 1953 - Deductions - Debts and encumbrances - Deceased had taken a house under hire purchase tenancy agreement on instalment basis - Under said agreement deceased was not owner of house in question and his position was only that of tenant till he paid all instalments - Deceased could pay only one instalment before his death - Whether value of house taken by deceased under hire purchase tenancy agreement was required to be estimated on basis of instalment actually paid by deceased - Held, yes - Whether, therefore, balance of unpaid instalments could not be deducted from value of estate - Held, yes FACTS The deceased had taken a house under a hire purchase tenancy agreement for a sum of Rs. 58,000 on instalment basis. The deceased could pay only one instalment of Rs. 2,650 for this house and the balance of Rs. 55,350 was outstanding against him at the time of his death to be payable to. The accountable person claimed exemption in respect of this house which was a residential house under section 33(1)(n) and also claimed the deduction of unpaid instalments against the total value of the estate. The Assistant Controller rejected the contention of the accountable person by holding that the value of the house could be estimated only on the basis of instalment actually paid by the deceased. This amount was accordingly taken as the value of the house in the hands of the deceased and treated as exempt under section 33(1)(n). On appeal, the Controller (Appeals) upheld the order of the Assistant Controller denying the deduction of the liability of unpaid instalments of the house. On further appeal, the Tribunal held that the unpaid instalments represented a liability by the deceased and the amount was liable to be deducted from the value of the estate. The Tribunal also held that this deduction could not be disallowed merely on the ground that it related to an exempted asset as there was no such provision in the Act. On reference, the revenue submitted that the deceased was not the owner of the house in question as there was only a hire purchase agreement in which it had been specifically provided that the position…

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