TMI Blog1987 (1) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... r the will, on such adoption, his widow, daughter and adopted son, each was entitled to 1/4th share and the residuary estate, viz., the 1/4th share would be utilised as a fund for hospital and educational institutions. Under the will, he appointed his wife, Bheema Bai, and his brother-in-law, Balakrishnaji Bandari, as the executors. Since Beema Bai also died subsequently, Balakrishnaji Bandari became the sole executor. The executor paid to the adopted son, Suresh chandra Lahoti, certain amounts towards household expenses, insurance premium, etc., from time to time. In the first instance, these amounts have been excluded by the Wealth-tax Officer from the net wealth of the estate of the deceased, Pannalal Lahoti. But subsequently, during the current assessments for the years 1973-74 and 1974-75, the Wealth-tax Officer has reopened the assessments for the assessment years 1968-69 to 1972-73 and the amounts paid to Suresh chandra Lahoti were brought into the net wealth and assessments were accordingly made. The executor then carried the matter in appeal and the Appellate Assistant Commissioner dismissed the appeal. On further appeal to the Income-tax Appellate Tribunal, while upholdin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ahoti are not excludible from the net wealth of the estate of the deceased. In support thereof, he placed reliance on V. M. Raghavalu Naidu Sons v. CIT [1950] 18 ITR 787 (Mad) and Administrator-General of West Bengal v. CIT [1965] 56 ITR 34 (SC). Sri Ranganatham, learned counsel for the assessee, countered the contentions stating that the assessee has paid the amounts referred to above for the relevant assessment years ; thereby, the title in the money has irrevocably gone out of the control of the executor and stands vested in the legatee, viz., Suresh chandra Lahoti. He has no power or authority to give as loan nor power or authority to call upon the said Lahoti to put back the amount in the estate of the deceased. He placed reliance on section 357 of the Indian Succession Act, 1925 (39 of 1925), and also sought reliance on CIT v. Bakshi Sampuran Singh [1982] 133 ITR 650 (P H). In view of the respective contentions, the question that arises for consideration is, whether the amounts paid during the relevant assessment years to Suresh chandra Lahoti are excludible from the net wealth of the estate of the deceased Pannalal Lahoti ? Section 2(m) of the Act defines " net wea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ows that he represents the estate of the deceased in the right of the testator. So long as he continues as an executor, he holds the estate as a representative of the deceased and not on behalf of the beneficiaries. Specific legatee has not been defined under the Act. So the definition under section 142 of the Indian Succession Act is to be applied. It says thus : " Where a testator bequeaths to any person a specified part of his property, which is distinguished from all other parts of his property, the legacy is said to be specific. " In this case, Aruna Bai (daughter's daughter) was bequeathed a sum of Rs. 50,000 by Pannalal Lahoti, the testator. She is thereby a specific legatee in respect of the specific part of his property of Rs. 50,000 on its distribution or application to her benefit. The next question is whether Suresh chandra Lahoti is entitled to the above amounts and acquired title thereto ? In Lord Sudeley v. Attorney-General [1897] AC 11 (HL), Lord Halsbury L. C., at page 15, held thus: " It is uncertain until the residuary estate has been ascertained of what it will consist. It may consist of many things-it may consist of only a sum of money-and until that ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the debts and the debts have precedence over the legacies. The effect of assent of the executor or administrator is stated in Chapter VII. Under section 332, the assent of the executor or administrator is necessary to complete a legatee's title to his legacy. It may be noted that the assent is required only to complete the title and not for the acquisition of the title. The title of the legatee is the title under the will and the assent is only to perfect the title and to complete it. Before such assent, however, the legatee's right is only an inchoate one which is transmissible to his personal representatives. Section 333 states that when there is assent of the executor, then the executor is divested of his interest and the assent transfers the subject of the bequest to the legatee. Of course, the assent when once it is given operates retrospectively to the date of the death of the testator. But there is one distinction between a specific legacy and residuary bequest. The doctrine of relation back does not apply to the bequest of residue, as residue only comes into existence when the administration is completed. " We respectfully agree with the above ratio. This ratio was also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired, in his individual capacity, he filed wealth-tax appeals in the Tribunal in WTA Nos. 114 to 119 of 1970-71. Therein, he disclaimed his title to the amounts got by him from the estate of his adoptive father. On the other hand, he stated that it still represents the estate of the deceased, Pannalal Lahoti. That was accepted by the Tribunal in the above cases. No doubt, sections 356 and 357 of the Indian Succession Act made a distinction regarding involuntary payment and voluntary payment. In the case of the former, when made by the orders of a court, the executor is entitled to call back the same to make good the deficiency and in the latter case, the executor is devoid of power to call upon a legatee to restitute. But it must be remembered that such payments made are on the premise of pre-existing title to and entitlement to payment. As stated earlier, certain amounts were paid to Sureshchandra Lahoti by the assessee during the assessment years. But, as observed by the Tribunal, such payments, therefore, have to be treated only as payments on account, that is to say, in the final computation, these payments made to the various residuary legatees will have to be taken note of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose of computing the net wealth. Under the above circumstances, the only conclusion that could be reached is that by operation of sub-section (1) of section 19A, the various amounts referred to hereinbefore paid to Suresh chandra Lahoti cannot be excluded and they still continue to be the assets of the estate of the deceased, Pannalal Lahoti. In Bakshi Sampuran Singh's case [1982] 133 ITR 650 (P H), relied on by Sri Ranganatham, the facts were that one Shamsher Singh bequeathed under his will dated May 15, 1970, his entire property exclusively to his only son. The son was appointed as administrator. While administering the estate, he applied part of the estate as his income. The entire property was sought to be taxed. It was contended that he was having the dual capacity as an administrator and as a legatee and to the extent he applied the property for his benefit, it can be treated as separate income and the remainder estate shall be deemed to continue to be the estate of the deceased. That contention was not accepted by the original authority and the Tribunal, but on reference, the Punjab Haryana High Court has held that to the extent that the testator applied it for his b ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
