SMT. P. LEELAVATHAMMA versus CONTROLLER OF ESTATE DUTY, ANDHRA PRADESH, HYDERABAD

Citation: [1991] 1 S.C.R. 448 · Decided: 15-02-1991 · Supreme Court of India · Bench: T.K. THOMMEN · Disposal: Dismissed
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Judgment (excerpt)

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SMT. P. LEELA VATHAMMA 
v. 
CONTROLLER OF ESTATE DUTY, ANDHRA 
PRADESH, HYDERABAD 
FEBRUARY 15, 1991 
[DR. T. KOCHU THOMMEN, N.M. KASLIWAL AND 
K. RAMASWAMY, JJ .] 
Estate Duty Act, 1953-Sections 5, 74-Estate Duty-Levv of-
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Scheme-Duty being burden on estate on death, not debt or encum-
C brdnce and not deductible-Maintenance of wife during deceased's life 
not debt or encumbrance and not deductible. 
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Words and Phrases-"Passes on the death"-Meaning. 
The High Court in a reference under the Estate Duty Act, 1953 
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held that in computing the net principal value of the estate for the 
purpose of the Act, the appellant was not entitled to deduct either the 
estate duty payable on the estate or the amount attributable to the 
maintenance of the wife of the deceased. The question was answered 
accordingly in favour of the Revenue. 
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The appellant contended in the appeal by cei-titicate that estate 
duty being a first charge on the estate passing on the death was an 
encumbrance and, therefore, deductible and the amount of the main-
tenance of the wife during her husband's life was also deductible. 
The Respondent contended that estate duty being payable only 
upon the estate passing on the death, it was not a liability which was 
deductible. Deduction in respect of the maintenance of the wife during 
the life of her husband also was not permissible. 
Dismissing the appeal, this Court, 
HELD: 1. The levy is upon the principal value of the property 
ascertained as provided under the Act. Property changes hands at the 
time of the death, by reason of the death, and, therefore, subsequent to 
the death. The imposition of the charge under the Act does not arise 
until the death has actually occurred and the property has, thereupon, 
passed .. [ 453E-G] 
448 
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LEELAVATHAMMAv. CONTROLLER 
449 
2. The liability to pay estate duty is fastened on the persons 
accountable. But their liability is limited to, and will not exceed, the 
assets of the deceased actually received by them, or which, but for their 
neglect or default, they might have received. Apart from the personal 
liability cast mi the persons accountable, a.'ld their liability to penalty in 
the event of default or concealment, the duty payable is charged on the 
property itself and any private transfer or delivery is void against any 
claim in respect of such duty. Es8entially and basically, therefore, the 
duty is a burden on the estate and that burden is fastened on the estate 
upon the death of the deceased. During his life, no liability under the 
Act arose or could arise. [453G-454A] 
3. Subject to the limitations and exceptions statutorily specified, 
the allowable deductions in the .determination of the chargeable value of 
the estate are the debts and encumbrances incurred before the death of 
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the deceased. Estate duty falling upon property passing upon the death 
had not become a debt or encumbrance until the death of the deceased, 
and is, therefore, not deductible. [454B-C] 
4. As regards the claim for deduction of the amount attributable 
to the maintenance of the wife of the deceased during his life, there is no 
evidence or any rmding to show that the estate had been burdened with 
any such debt or encumbrance by reason of the husband's failure to act 
upto his statutory obligation to maintain his wife. [454EmF] 
5. The expression "passes on the death" denotes change in the 
title or possession of the whole property taking place at the death. It is 
immaterial to whom the property passes. [4530-E] 
Inland Revenue Commissioner v. Crossman, [1937] AC 26; W:-
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nans & Another v. Attorney General, (1910] AC 27, referred to [1975] 99 
-~- · ITR 221 (Karnataka); [1978] 111 ITR 365 (Gujarat); (1981] 127 ITR 
642 (Allahabad); (1981] 132 ITR 871 (Madras); (1982] 137 ITR 801 
(Gaubati); [1990] 186 ITR 29 (Bombay); Controller of Estate Duty v. 
Estate of Late Omprakash Bajaj, (1977] llOITR 263 (A.P.) approved. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. S22 
of 1978. 
From the Judgment and Order dated 23.3.1977 of the Andhra 
Pradesh High Court in Case Referred (Estate Duty Case) No. 6 of 
1975. 
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450 
SUPREME COURT REPORTS 
[1991) 1 S.C.R. 
T.A. Ramachandran and Ms. Janki Ramachandran for the 
Appellant. 
S.C. Manchanda, Ms. A. Subhashini (NP) and K.P. Bhatnagar 
for the Respondent. 
· 
The Judgment of the Court was delivered by 
THOMMEN, J. This appeal by certificate arises from the judg-
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