1983 (6) TMI 45 - AT - Income Tax

Summary

Issues:
- Assessment of deceased's income and wealth in the hands of his wife
- Interpretation of Sec. 168 of the IT Act, 1961 and Sec. 19A of the WT Act, 1957
- Validity of the orders issued by the ld. CIT under Sec. 263 of the IT Act, 1961 and Sec. 25 of the WT Act, 1957

Analysis:

The judgment involves two batches of appeals filed by the assessee against the orders of the ld. CIT, Lucknow for the assessment years 1977-78 and 1978-79 under the IT Act, 1961 and the WT Act, 1957. The primary issue at hand is the assessment of the deceased's income and wealth in the hands of his wife, Smt. Ram Dulari Talwar, who was the sole legatee of all the properties of the deceased. The ld. CIT initiated proceedings under Sec. 263 of the IT Act, 1961 and Sec. 25 of the WT Act, 1957, contending that the income and wealth of the deceased should have been aggregated in the hands of the wife for assessment purposes.

The key legal provision in question is Sec. 168 of the IT Act, 1961, which is analogous to Sec. 19A of the WT Act, 1957. The tribunal highlighted that these sections provide for the income of the estate of a deceased person to be chargeable to tax in the hands of the executor separately. The tribunal referred to a previous judgment where it was held that even if the executor is the sole beneficiary, the income should be assessed separately as the executor retains a dual capacity. The tribunal emphasized that the ld. CIT erred in not considering these provisions and wrongly concluded that the income and wealth should be clubbed with that of the deceased's wife.

Furthermore, the tribunal noted that the assessments deemed erroneous by the ld. CIT were in relation to the deceased, not his wife. As there were no proceedings against the individual assessments of Smt. Ram Dulari Talwar, the tribunal found the orders of the ld. CIT to be erroneous themselves. Consequently, the tribunal set aside the orders issued by the ld. CIT under Sec. 263 of the IT Act, 1961 and Sec. 25 of the WT Act, 1957, ruling in favor of the assessee.

In conclusion, the tribunal allowed the appeals filed by the assessee, emphasizing the correct application of Sec. 168 of the IT Act, 1961 and Sec. 19A of the WT Act, 1957 in assessing the income and wealth of the deceased separately in the hands of the executor, as per legal provisions and established precedents.