Sugla, J.:— The main question of law involved in these four estate duty references at the instance of the Department is common. For the sake of convenience, all these references are disposed of together. The questions of law referred to this Court in the individual references are—

Estate Duty Reference No. 21 of 1976

“Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the estate duty liability should be deducted in the computation of the principal value of the estate of the deceased?”

Estate Duty Reference No. 30 of 1976

1. “Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that in the computation of the principal value of the estate of the deceased, the estate duty payable in respect of the estate of the deceased should be deducted?”

2. Whether on the facts and in the circumstances of the case, the Tribunal erred in holding that tax liability with reference to annuity deposit was not a burden and/or charge on such annuity deposit?”

Estate Duty Reference No. 24 of 1976

1. “Whether on the facts and in the circumstances of the case, the Tribunal was justified in admitting an additional ground of appeal filed by the accountable person claiming deduction on account of estate duty liability from the principal value of the estate of the deceased which was never raised by the accountable person before the Assistant Controller of Estate Duty or the Appellate Controller of Estate Duty in the course of the assessment or the appeal proceedings before them?”

2. “Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that in the computation of the principal value of the estate of the deceased, the estate duty payable in respect of the estate of the deceased should be considered?”

Estate Duty Reference No. 34 of 1976

1. “Whether on the facts and in the circumstances of the case, the Tribunal was justified in admitting an additional ground of appeal filed by the Accountable Person claiming deduction on account of estate duty liability from the principal value of the estate of the deceased which was never raised by the Accountable Person before the Assistant Controller of Estate Duty or the Appellate Controller of Estate Duty in the course of the assessment or the appeal proceedings before them?”

2. “Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that in the computation of the principal value of the estate of the deceased, the estate duty payable in respect of the estate of the deceased should be deducted?”

3. “Whether on the facts and in the circumstances of the case, the Tribunal's interpretation that the words “amount of tax so paid” in section 50-B of the Estate Duty Act, 1953 mean the difference between the tax payable by the Accountable Person on the total income including the capital gain arising from the sale of any property on which estate duty is leviable and the tax payable by him on the total income excluding such capital gain is correct?”

2. Since the first question of law in Estate Duty Reference Nos. 24 and 34 of 1976 raises a preliminary issue as to the admission of an additional ground which pertains to the main question in all the four references, the said question of law is taken up first. Admitted facts in this regard are that no claim was made for deduction of estate duty liability from the principal value of the estate by the accountable persons while filing their estate duty returns. The claim for such a deduction was not made before the Assistant Controller nor before the Appellate Controller. These authorities passed their respective orders, naturally, without dealing with and/or referring to this aspect of the matter. The ground regarding the claim for deduction in respect of the estate duty liability from the principal value of the estate was raised for the first time before the Tribunal as an additional ground. Observing, inter alia, that the ground raised a pure question of law the adjudication of which required no further material, the Tribunal admitted the additional ground. Placing reliance on the Supreme Court decision in the case of Additional Commissioner of Income-tax, Gujarat v. Gurjargravures P. Ltd., Shri Jetly, the learned counsel for the Revenue, submitted that the ground having not been raised before the Assistant Controller nor before the Appellate Controller, the accountable person could not be heard to say that he was aggrieved by their orders in so far as deduction in respect of the estate duty liability from the principal value of the estate was not allowed. Fairly admitting that this Court had taken a view that legal questions could be raised for the first time before the Tribunal in cases referred to and relied upon by the Tribunal in its order, he pointed out that the situation had materially changed in view of the Supreme Court decision (supra).

3. The learned counsel for the assessee, on the other hand, besides strongly relying on the order of the Tribunal, submitted that the Supreme Court decision was not applicable in this case and in any event the ratio thereof supported the view taken by the Tribunal. In this context, the counsel referred to the observations made by Their Lordships of the Supreme Court in the penultimate paragraph of the judgment Reference was also made to an Andhra Pradesh High Court decision in the case of Commissioner of Income-tax, A.P v. Gangappa Cables Ltd., in which it was held that in a case where there was practically all material necessary for deciding the additional ground taken before the Tribunal for the first time, the Tribunal was justified in admitting such a ground and that the Supreme Court decision in Addl. C.I.T Gujarat v. G.P Ltd. (supra) was not applicable in such a case. Special Leave Petition filed by the Department against the Andhra Pradesh decision, it was pointed out, was rejected by the Supreme Court. Unlike under the Income-tax Act, under the Estate Duty Act the Tribunal had, it was stated, even powers of enhancement under s. 63(5) so much so that the powers of the Tribunal in an appeal under s. 63(1) of the Estate Duty Act were co-terminus with those of the Appellate Controller and the Assistant Controller.

4. In order to appreciate rival contentions, it is desirable to refer to the facts in the Supreme Court case. The assessee in that case had not claimed relief under s. 84 before the Income-tax Officer. The Income-tax Officer had naturally no occasion to consider such a claim. The assessee claimed the relief for the first time before the Appellate Assistant Commissioner who refused to entertain the ground as no claim was made by the assessee before the Income-tax Officer. In second appeal, the Tribunal held that the Appellate Assistant Commissioner should have entertained the ground and the view taken by the Tribunal was upheld by the Gujarat High Court on reference. Reversing the decision of the Gujarat High Court, the Supreme Court held that where neither any claim as to relief under s. 84 was made before the Income-tax Officer nor was there any material on record supporting the claim, the Appellate Assistant Commissioner was justified in not entertaining the ground or in not directing the Income-tax Offficer to consider the assessee's claim for such a relief. Apart from the fact that the emphasis in that case was on the absence of material in support of the claim, the Supreme Court specifically observed as under [(1977) 4 SCC 571 : at p. 43, para 6 of [1978] A.I.R S.C 40]:—

“As we have pointed out earlier, the statement of case drawn up by the Tribunal does not mention that there was any material on record to sustain the claim for exemption which was made for the first time before the Appellate Assistant Commissioner. We are not here called upon to consider a case where the assessee failed to make a claim though there was evidence on record to support it, or a case where a claim was made but no evidence or insufficient evidence was adduced in support. In the present case neither any claim was made before the Income-tax Officer, nor was there any material on record supporting such a claim.”

5. Thus, to say the least, the question of admissibility of a ground for the first time before the Appellate authority where the material in support of the ground is already on record or a ground which raises a pure question of law the adjudication of which does not require any material at all was left open-by the Supreme Court. Considering the question in this background, it appears to us that the Tribunal's reliance on this Court's decisions reported in Commissioner of Income-tax v. Breach Candy Swimming Bath Trust, Bombay, New India Life Assurance Co. Ltd. v. C.I.T, C.I.T v. Hazarimal Nagji & Co., Beharilal Ramcharan Cotton Mills Ltd. v. C.I.T and J.S Parkar v. V.B Palekar in support of the admission of the additional ground was fully justified. In this connection, it is desirable to note that the Andhra Pradesh High Court in C.I.T A.P v. Gangappa Cables (supra) distinguished the Supreme Court decision in Addl. C.I.T Gujarat v. G.P Ltd. (supra) on the ground that unlike the facts in the Supreme Court case, in the case before it practically all the material in support of the claim was already on record. On the same logic we see full justification in the Tribunal's admitting the additional ground as the ground raised herein is a pure question of law the adjudication of which does not require reference to any facts.

6. The first question in Estate Duty Reference Nos. 24 and 34 of 1976 is accordingly answered in the affirmative and in favour of the accountable person.

7. For the purpose of considering the main question of law referred in all the four references, it is desirable to refer to s. 5 of the Estate Duty Act which is a charging section. The section provides that estate duty shall be levied upon the principal value of all property which passes on the death of a person. The expressions “property” and “property passing on the death” are defined in sub. ss. (15) and (16) of s. 2. The crucial event is the death. Its effect is passing on of the property and the estate duty is leviable on the principal value of the property so passing.

8. How the principal value of all properties passing on death is to be computed is provided in Parts V and VI of the Estate Duty Act. Relevant sections for the purpose of the question herein are ss. 36 and 44. How principal value of any property is to be estimated is found in s. 36 whereas what deductions are to be made therefrom for ascertaining the principal value of the estate liable to estate duty is found in s. 44. Section 44, it may be further stated, expressly provides for deductions on account of debts and liabilities for determining chargeable value of the estate.

9. In our judgment, there is no question of taking into account the estate duty liability at the stage of estimation of the principal value of the property under s. 36 itself for more than one reason. Section 36 refers to the estimate of the principal value of any property. Any property would mean any and every property. It is nobody's case that s. 36 contemplates valuation of the all properties of the deceased in one lump. Unless that is done, it will not be possible to know the exact extent of estate duty liability in the total estate duty liability pertaining to a particular property. That apart, if what is contended by the counsel for the assessee is accepted, s. 44 may to that extent become redundant. In any event, that was not the case of the accountable person before the Tribunal nor has the Tribunal referred to this Court such a question of law. Though reference is made to any section in the question, the question raised clearly is whether estate duty payable in respect of the estate of the deceased should be deducted from the principal value of the estate.

10. Thus, the answer to this question will have to be decided with reference to s. 44 or at best s. 74 of the Estate Duty Act. In this context, reference may usefully be made to the two Supreme Court decisions in the cases of Kesoram Industries and Cotton Mills Ltd. v. Commissioner of Wealth-tax (Central) Calcutta and H.H Setu Parvati Bayi v. Commissioner of Wealth-tax, Kerala strongly relied upon by the counsel for the accountable person. In both the cases the provision involved was s. 2(m) of the Wealth Tax Act, 1957. Wealth-tax is payable on net wealth. This expression is defined in s. 2(m) as meaning the aggregate value of all assets reduced by the aggregate value of all the debts owed by the assessee. The question in Kesoram Industries case (supra) was whether provision made for income-tax payable in the balance-sheet of the assessee, and in Setu Parvati's case (supra) it was whether wealth-tax payable on the net wealth on a particular valuation deed, was deductible under s. 2(m) for computing the net wealth of the assessee chargeable to wealth-tax. It was held that liability to pay income-tax as well as wealth-tax crystalize on the valuation date or the last day of the previous year and not on the first day of the assessment year and, therefore, such liabilities were debt owed by the assessee and, therefore, deductible under s. 2(m). These two decisions, in our view, are not applicable in this case, the purport and scope of s. 44 of Estate Duty Act being materially different from that of s. 2(m) of the Wealth Tax Act. Read carefully, s. 44 leaves no scope for doubt that debts and encumbrances deductible under that section are those which are incurred or created by the deceased.

11. This is clear from the language of the section itself which reads as under:

“44. In determining the value of an estate for the purpose of estate duty, allowance shall be made for funeral expenses (not exceeding rupees one thousand) and for debts and encumbrances; but an allowance shall not be made—

(a) for debts incurred by the deceased, or encumbrances created by a disposition made by the deceased, unless, subject to the provisions of section 27, such debts or encumbrances were incurred or created bona fide for full consideration in money or money's worth wholly for the deceased's own use and benefit and take effect out of his interest, or

(b) for any debt in respect whereof there is right to reimbursement from any other estate or person, unless such reimbursement cannot be obtained, or

(c) more than once for the same debt or encumbrance charged upto different portions of the estate, or

(d) for debts incurred by or on behalf of the deceased by way of dower, to the extent to which such debts are in excess of rupees five thousand.

and any debt or emcumbrance for which an allowance is made shall be deducted from the value of the property liable thereto.”

12. In the premises, even if it is assumed that liability to estate duty, passing on of the property on death and the death occur at the same moment, the estate duty liability cannot be allowed as deduction as the estate duty liability cannot certainly be said to have been created by the deceased. Section 74, to our mind, has also no application. As stated earlier, the principal value of the estate liable to estate duty is computed under Parts V and VI. Method of collection of duty is provided in Part VII. In case of difficulty in collection of duty, charge on property is created under Part VIII. Section 74 falls in Part Vin. In the scheme of things, estate duty payable within the meaning of s. 74 would be one about which demand notice under s. 73 has been served. No action for recovery of the estate duty can be taken against an accountable person unless a demand notice in the prescribed form is served. This event must of necessity occur after the death. Besides, the estate duty is a first charge on immovable property after adjustment of all debts and encumbrances. The charge is, thus, an event subsequent to the death.

13. The counsel are agreed that there is no decision of our High Court on the point at issue. While the learned counsel for the accountable person had strongly relied on the Mysore High Court decision in the case of Mrs. Blanche Nathalia Pinto v. State of Mysore, the learned counsel for the Department stated that decision was distinguishable and Karnataka High Court itself took a contrary view in the case of Smt. V. Pramila v. Controller of Estate Duty, Bangalore. He further stated that Gujarat High Court, Andhra Pradesh High Court, Madras High Court and Allahabad High Court have all in a number of cases also taken the same view as has been taken by the Karnataka High Court in Smt. V. Pramila v. Controller (supra).

14. In our judgment, Mysore High Court decision in Mrs. B.N Pinto v. State of Mysore (supra) is clearly distinguishable as pointed out by the learned counsel for the Department. The question involved in that case pertained to the determination of market value of the estate of the deceased under cl. (b) of s. 53(1) of the Mysore Court Fees and Suits Valuation Act, 1958. Referring to the provisions which has been reproduced at page 68, it was held that the valuation date for that purpose was the date on which the application for grant of probate was filed. This event was admittedly subsequent to the death of the deceased. It was in these circumstances that Mysore High. Court held that for the purpose of the valuation of the estate of the deceased for the purpose of Mysore Court Fees and Suits Valuation Act, estate duty liability is to be taken into account. In the case before us, we are concerned with the determination of the principal value of the estate for the purpose of estate duty itself.

15. Identical question which is before us came up for consideration before Karnataka High Court in the case of Smt. V. Pramila v. Controller of Estate Duty, Bangalore (supra). It was held—

““Section 44 of the Estate Duty Act, 1953, is the only section which provides for deductions allowable in computing the value of property passing on death. Estate duty payable on the estate of a deceased does not fall within section 44 and this is clear from sub-section (1) of section 74 of the Act.

Section 74(1) provides that after the debts and encumbrances allowable under Part VI of the Act, the estate duty shall be a first charge on the immovable property passing on the death of the deceased. The debts and encumbrances allowable under Part VI of the Act take priority over the estate duty payable. If estate duty is either a debt or encumbrance allowable under section 44, section 74(1) could not have stated that the debts and encumbrances allowable under Part VI shall rank above estate duty for which charge is created. Therefore, it is clear that estate duty payable on the estate of a deceased person is not liable to be deducted under section 44 of the Act”

16. Andhra Pradesh High Court in the case of Controller of Estate Duty v. Estate of Late Omprakash Bajaj, followed the Karnataka decision and took the same view. Gujarat High Court also in Smt. Shantaben Narottamdas v. Controller of Estate Duty, Gujarat, followed the Karnataka decision and took the same view. Madras High Court in Controller of Estate Duty, Madras v. Dr. Rajah Sir M.A Muthia Chettiar, also held that the estate duty payable on the estate of the deceased was not the liability of the deceased. It was the liability of the accountable person and that under s. 44 of the Estate Duty Act the liability of the deceased alone was deductible. Allahabad High Court also in Govind Prasad v. Controller of Estate Duty, Lucknow, took a similar view. We do not consider it necessary to refer to these cases in detail. This Court has already held in a number of cases that where there is even one High Court decision on a point of law on a statute concerning the whole country, it would not like to take a view different from the one taken by that High Court but for the compelling reasons. In the present case there are not only no compelling reasons, we are quite satisfied about the view taken by these High Courts and in fact we have given our own reasons for coming to the conclusion that the estate duty liability cannot be taken into account at the time of estimating the principal value of the property under s. 36 and that the principal value of the property determined under s. 36 cannot also be reduced by the Estate Duty liability as debts and encumbrances of the deceased under s. 44. As the estate duty liability is an even subsequent to the passing on of the property on the death of the deceased, it is not a liability owed or created by the deceased. Accordingly, the estate duty liability cannot be allowed as a deduction from the principal value of the estate under s. 44. For reasons stated earlier, it cannot also be considered as a charge on the property at the time of the death as this charge is created only after the estate duty payable is determined and a demand notice is issued and that too when the duty is not paid by the accountable persons. All that certainly happens long after the death of the deceased.

17. Accordingly, the main question involved in all the four references is answered in the negative and in favour of the Department.

18. This takes us to the third question involved in Estate Duty Reference No. 34 of 1976 only. In order to appreciate rival contentions in this behalf, it is desirable to refer to the provisions of s. 50B of the Estate Duty Act. The section reads thus:

“Where any property on which estate duty is leviable under this Act is transferred within a period of two years following the death of the deceased and tax under the Income-tax Act, 1961 (43 of 1961) has been paid in respect of the capital gains arising from such transfer, the estate duty payable shall be reduced by a sum which bears to the total amount of tax so paid the same proportion as the amount paid towards estate duty out of the porceeds of the transfer bears to the gross proceeds of such transfer.”

19. There is no dispute that certain properties had to be sold to enable the accountable person to discharge the estate duty liability and that income under the head capital gains arising from the transfer of such property was assessed to tax. However income-tax is leviable on the total income of an assessee. This being so, the accountable person as an assessee was charged to tax on the basis of his total income which included income under the head capital gains. The question that arose for consideration was how the tax paid on capital gains income should be determined for the purpose of claiming deduction from the estate duty payable under s. 50B of the Estate Duty Act. It was the case of the accountable person that the proper method would be to first determine tax payable by the assessee on his total income other than income under the head capital gains and to reduce income-tax so payable from, the total income-tax payable determined by the Income-tax Officer on his total income including the income under the head capital gains. In fact, Income-tax Officer had certified that such an amount was payable as income-tax on the income under the head capital gains. The case of the Department, on the other hand, is that the tax ought to be worked out at the average rate of tax.

20. In our opinion, the manner in which the accountable person computed the tax payable on the capital gains income is quite reasonable. The fact cannot be ignored that the properties had to be transferred for making payment of the estate duty. If the properties were not sold, the accountable peson would have been assessed on his total income other than the capital gains income. In any event it cannot be disputed that this method is also reasonable. In the absence of any method provided in the Act, either of the two methods could have been adopted for determining the amount of tax paid on capital gains income. The method adopted by the accountable person is reasonable. The Income-tax Officer himself had certified it. Under the circumstances, we find nothing wrong in the view taken by the Tribunal. Accordingly, this question is answered in the affirmative and in favour of the accountable person.

21. Question No. 2 in Estate Duty Reference No. 30 of 1976 is at the instance of the assessee in an application for reference filed by the Department The question is in no way connected with the question of law referred by the Tribunal at the instance of the Commissioner. In the circumstances, following the Supreme Court decision in the case of Commissioner of Income-tax, Kerala v. V. Damodaran, we hold that the Tribunal should not have referred the question to this Court under s. 64(1) of the Estate Duty Act, 1953. Accordingly, the question is returned unanswered. No order as to costs.

22. Order accordingly.