TMI Blog1980 (7) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... Singh, as the executor of his estate under s. 168 of the Act. Since the assessee was also an income-tax assessee with the financial year as his accounting year, a separate assessment for the assessment year 1971-72, was made in his individual capacity in respect of his income from salary, dividends and interest on deposit. Consequently, for the assessment year 1971-72, three different assessments were made on January 24, 1972, in three different capacities. On a scrutiny of the records, the Commissioner of Income-tax was of the view that the assessment order dated January 24, 1972, in respect of the personal assessment of the assessee for the assessment year 1971-72, was erroneous and prejudicial to the interests of the revenue, inasmuch as the ITO failed to include in the assessed income of the assessee the income derived by him from May 18, 1970 to March 31, 1971, from the assets inherited by him from his father. A notice under s. 263 of the Act was served on the assessee. The assessee pleaded that the assessment in respect of the income from the estate of his father for the period from May 18, 1970 to December 31, 1970, had been correctly assessed in his hands as an executor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the position according to the will, there is no question of formal declaration of the administration of the estate being complete. Further, as per note 2 appended below the statement of total income for the period 19-5-1970 to 31-12-1970, attached to the returns of income filed by the assessee for the assessment year 1971-72, under section 161 of the Act, he applied an amount of Rs. 1,75,181 due to the estate of the deceased from Laxmi Ginning and Oil Mills, Khanna, to his own benefit, inasmuch as, the amount in question was not transferred by the assessee to his personal account on 23-5-1970. As indicated elsewhere, the death came about on 18-5-1970, and the transfer of the huge amount in question was effected immediately, i. e., on 23-5-1970. That leaves absolutely no room for the doubt, if any, that the assessee became the absolute owner of the estate in question as also the income therefrom immediately after the death of the deceased. And, then, if, for argument sake, it is conceded for a moment, that the assessee constituted an executor in respect of the estate of his father, then he was the legatee as well. In that event, as the executor and the legatee would happen to be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade in the hands of the legal representative, while the second will be made in the hands of the executor or administrator. Whereas, against the legal representative, there would be assessment only for one year, namely, the assessment year corresponding to the accounting year of death, against the executor or administrator, there would be yearly assessments commencing from the assessment year corresponding to the accounting year of death and lasting up to the year till the administration of the estate is completed. The assessment of a person as legal representative or as executor is different from his personal assessment. Under section 168(2), the personal or private income of an executor has to be assessed separately and cannot be included in his representative assessment. 9. The income received by an executor during the course of the administration belongs to him and he alone is liable to be assessed as such. The title of the residuary legatee accrues only when the administration is complete and after the residue is ascertained and not till then. The proposition of law derives support from [1950] 18 ITR 787 (Mad) (V. If Raghavalu Naidu and Sons v. CIT). According to this authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it does not, necessarily follow that he receives the income in the latter capacity. In other words, the executor retains his dual capacity and he must be assessed as an executor in respect of the income received by him from the estate of the deceased irrespective of the fact that he himself happens to be the sole beneficiary. 12. Another argument of the Commissioner of Income-tax is that since the assessee had applied some assets of the estate to his own benefit, soon after the death of his father, he had become the absolute owner of the estate in question as also the income therefrom immediately after the death of the deceased. This argument is also not acceptable. After all, the assessee, as an executor, had to administer the estate and, if in the process, he applied a part of the estate to his benefit as a beneficiary, it does not mean that he became the owner of the 'remaining assets' before the administration was completed. For completion of the administration, much had yet to be done. As stated by the representative of the assessee, Shri Shamsher Singh deceased left behind considerable agricultural land and shares in various companies. He had also to recover certain loans f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cutor for the period from 19-5-1970 to 31-12-1970, amounted to Rs. 8,05,000, whereas, the same has dwindled to Rs. 13,600 and Rs. 13,400 in the assessment years 1972-73 and 1973-74. Similarly, the income of Shri Shamsher Singh for the period from 19-5-1970 to 31-12-1970, as declared by the assessee as an executor, was Rs. 1,88,730 including capital gains of Rs. 1,45, 182 whereas, the same has been shown at Rs. 22,030 and Rs. 2,090 for the assessment years 1972-73 and 1973-74. That being so, it cannot be said that the assessee is intentionally delaying the administration of the estate of his father because he himself happens to be the sole beneficiary under the will. 14. In view of the above discussion, we are of the opinion, that the order dated 24-1-1972 of the Income-tax Officer in respect of the personal assessment of the assessee, in which he did not include the income received by him as an executor from the estate of his father for the period from 19-5-1970 to 31-3-1971, was not erroneous and that the Commissioner of Income-tax erred in cancelling this assessment under section 263 of the Income-tax Act on the grounds referred to by him in his order. We are, therefore, unable ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
