Law:

Section:

Section 64(3) of the estate duty act, 1953-Reference-Question of law-Father of deceased had created a trust and set aside some shares for it-Brother of deceased sold away those shares-Neither corpus nor income therefrom reached hands of trust which filed suit to recover same-Decree awarded to trust was secured against jagir inherited by deceased and his brother-Trust took no legal action to recover decretal amount-Accountable person's claim of deduction of decretal amount from dutiable estate of deceased was eventually allowed by tribunal-Whether question regarding existence of such liability and its deducibility from dutiable estate of deceased was referable question of law-Held, on facts, yes Facts The father of the deceased had created a trust and set aside certain shares of a company for it. The brother of the deceased sold away those shares and neither the corpus nor income therefrom were handed over to the trust. The trust filed a suit for the recovery of the trust property and the income therefrom which was eventually decreed in favour of the trust in the sum of Rs. 7 lakhs. The payment of the amount was secured by pledging the proceeds of a certain jagir inherited by the deceased and his brother and the decree was enforceable against the deceased. In the estate duty proceedings in respect of the estate of the deceased, the accountable person claimed a deduction of the above-mentioned liability of Rs. 7 lakhs. The Assistant Controller rejected the claim on the ground that the trust had taken no legal action to recover the amount and the deceased had all along treated the liability as non-existent. On appeal, the Appellate Controller allowed the claim to the extent of one-half of the amount. On cross-appeals, the Tribunal allowed the accountable person's claim in full and dismissed the revenue's appeal as well as its subsequent reference application. On application under section 64(3) : Held The question as to whether there was an existing liability of the estate of the deceased to the extent of Rs. 7 lakhs which was deductible in the computation of the estate duty payable in respect of the estate of the deceased, was a question of law arising from the…

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