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1937 (1) TMI 12

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..... be leviable and recoverable from such Official Assignee . The facts briefly stated were these: One Jnanendra Nath Pramanik was adjudged an insolvent by an order of this High Court on the 16th May 1933. Thereupon all his estate and effects vested in the Official Assignee by virtue of the provisions of Sec. 17 of the Presidency Towns Insolvency Act. The Official Assignee since the date of the adjudication has been administering the estate of the insolvent. That estate consists of certain house properties situated in the city of Calcutta. The Income Tax Officer took the view that the Official Assignee was a person falling within the purview of Sec. 41 of the Indian Income Tax Act and, accordingly, he issued upon him a notice under Sec. 22(2) of the Act. That notice was dated 24th January 1935 and required the Official Assignee to submit a return of the income of the insolvent's estate. In reply to that notice, the Official Assignee wrote a letter to the Income-tax Officer dated 14th February 1935 in which he intimated that no statement of income in an insolvent estate could be rendered and that all that he could do in the matter was to send a statement of the deficiency acc .....

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..... pinion of this Court. The amount of the tax, i.e., the sum of ₹ 468-12 aforesaid, was paid under protest on the 24th February 1936. The question which we have to decide is the one which is set out in paragraph 2 of the case. The Commissioner of Income Tax points out that the only source of the income in question in this case was the house property. The house property vested in the Official Assignee under the Presidency Towns Insolvency Act 1909. Now Sec. 9(1) of the Indian Income Tax Act provides that tax shall be payable by an assessee under the head 'property' in respect of the bona fide annual value of property consisting of any building or lands appurtenant thereto of which he is the owner, other than each portion of such property as he may occupy for the purposes of his business, subject to the following allowances mentioned thereunder. The Commissioner of Income-tax expressed the opinion that when property vests in the Official Assignee under the provisions of the Presidency Towns Insolvency Act he becomes the owner of the property within the meaning of Section 9 of the Income Tax Act and consequently, in the cage of house property, tax becomes payable by t .....

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..... s liable to be assessed and whether he was rightly assessed. It is to be observed that the Commissioner of Income- tax bases his opinion both upon the provisions of section 9 and upon the provisions of Section 41. Mr. Page appearing on behalf of the assessee argues that neither of those sections applies to the circumstances of this case. I am of the opinion that Mr. Page is correct to this extent that those sections cannot, both apply to the circumstances of this case and the most that can be said is that one of them may apply. Mr. Page's first point was that the subject, matter of the assessment with which we are concerned changed its character when it passed into the hands of the Official Assignee and that although it was house property when it belonged to the insolvent and as such would have been a fit subject matter of income tax upon the basis of the bona jute annual value, yet, when it passed into the hands of the Official Assignee (by reason of the provisions of Section 17 of the Presidency Towns Insolvency Act) the property ceased to have the same taxable quality and was no longer a fit subject for taxation in the hands of the Official Assignee. With that contention .....

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..... to say that any proportion of the interest is not 'receivable' or any proportion of the property is not 'owned' by the incorporated trustees . The point we have to decide is I think covered by the opinion in a case to which our attention was drawn by Mr. Advocate General namely, the case of the Commissioners of Inland Revenue v. Fleming, 14 Tax Cases 78. The headnote of that case is The Respondent's estates were sequestrated in 1921 under the Bankruptcy (Scotland) Act, 1913, and a trustee was appointed. The assets included heritable properties subject to mortgages, and the rents were applied by the trustee in payment of mortgage interest and redemption of mortgages, but not in payment of dividends to creditors. At the close of the sequestration the Respondent was re-invested in those properties which had not been sold, and received the balance of rents in the trustee's hands. Ordinary creditors received 9s. in the ?, out of the amount realised by the trustee, and the Respondent obtained hie discharge in 1926 on payment of a composition of a further 1s. in the ?. The Respondent thereupon claimed repayment of tax suffered on the heritable properties f .....

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..... ecome entirely vested in the Official Assignee and that the income derived from the said property became the income of the Official Assignee for the purpose of income tax and so subject to taxation. In the present case the income was in the nature of statutory income arrived at upon the basis of the bona fide annual value of the property in question. On the authority of the case I have just cited and indeed, on general principles arising out of the provisions of section 17 of the Presidency Towns Insolvency Act we have come to the conclusion that it is right to say that the Official Assignee is the owner of the property which was the subject matter of the particular assessment with which we are now concerned. Upon that view of the matter, it is not necessary to consider, I think, whether or not the provisions of section 41 of the Income-tax Act of 1922 can be prayed in aid by the Income-tax authority for the purpose of extracting tax from the Official Assignee in the circumstances such as the present. Nor do we think it necessary to consider whether there were any other assets which might have come into the hands of the Official Assignee in connection with this particular insolvenc .....

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