TMI Blog1995 (9) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... the sale of shares and jewellery. The capital gains on the sale of shares had been disclosed by the assessee in assessment year 1992-93 as well as in assessment year 1993-94. However, benefit under section 54F was claimed in respect of the entire capital gains, The Assessing Officer rejected the claim of the assessee on the ground that one of the conditions for grant of the benefit under section 54F was not satisfied in so far as assessee was the owner of another residential house property at No. 1, Jor Bagh. In this connection, reference has been made by the Assessing Officer to the income-tax and wealth-tax returns filed by the assessee as also to the will of Mrs. S.D. Puri by virtue of which the aforementioned share in the residential house property had been bequeathed in favour of the assessee. 2. The assessee appealed to the CIT (Appeals), who vide consolidated order dated21-2-1995, agreed with the Assessing Officer and dismissed the appeals of the assessee. 3. The assessee is in appeal before us. A paper book containing 39 pages had been filed by the assessee before-the date of hearing and as required under rules a certificate was given in respect of the papers filed, tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ames of Mrs. V.P. Puri and Mrs. V.K.S. Bawa. The rent, according to the learned counsel, was being collected as administrators of the property and after meeting the expenses the proceeds of rent were distributed amongst the legatees. The learned counsel also pointed out that Shri S.L. Bawa one of the executors having died on14-9-1988. The rent was being collected in the name of Shri V.P. Puri and Smt. V.K.S. Bawa. Relying upon the decision of the P H High Court in the case of CIT v. Bakshi Sampuran Singh [1982] 133 ITR 650 at page 655, the learned counsel contended that mutation of the property was necessary for completion of the administration of the will. Our attention was also invited to section 211 of the Indian Succession Act, 1925 in support of the contention that the property vests in the executor though he is not the owner of the property. Reliance was also placed on the decision of the Supreme Court in the case of Navnit Lal Sakarlal v. CIT [1992] 193 ITR 16 at pages 25 to 27 in support of the contention that the executor continues to be assessable under section 168(3) until the estate is distributed amongst the beneficiaries according to their several interests. Reliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there was distribution of the assets, the learned counsel contended that though the Assessing Officer has suggested in the assessment order about the deemed distribution of assets amongst the legatees, CIT (Appeals) has not recorded any finding in regard to this issue. It was accordingly contended that in case the Tribunal considers it necessary to decide this issue, the matter accordingly should be referred back to the CIT (Appeals) for recording a finding on this issue as assessee could not be deprived of a forum of appeal available to him in this regard in the shape of first appellate authority. In this connection, reliance was placed on the decision of the Supreme Court in the case of CIT v. Shapoorji Pallonji Mistry [1962] 44 ITR 891. The learned counsel further contended that the Department cannot take advantage of the returns filed by the assessee as the principle of estoppel does not apply to income-tax proceedings. In this connection, reliance was placed on the decision of the Delhi High Court in the case of CIT v. Bharat General Reinsurance Co. Ltd [1971] 81 ITR 303. The learned counsel clarified that the other property of the deceased had been distributed according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned D.R., had not been filed before the Assessing officer and were filed before the CIT (Appeals) for the first time. Apart from pleading prompt action against the firm for giving a wrong certificate, the learned D.R. contended that the evidence placed at page 22 of the paper book is incomplete in so far as the affidavits attached to the application have not been filed perhaps deliberately before the Tribunal. The learned D.R. sought the permission of the Bench to file these affidavits which, according to her, should be sufficient to reject the claim of the assessee about the non-distribution of the property as in the affidavits Mrs. V.K.S. Bawa, i.e., the assessee has herself stated on oath that her husband was the co-owner of the property No. 1/172 Jor Bagh, New Delhi. (Shri S.L. Bawa the husband of the assessee is also one of the legatees as per the will of Smt. Shanti Devi Puri). The daughter of Shri S.L. Bawa has also deposed in a separate affidavit that Shri S.L. Bawa was the co-owner of the property No. 1/172, Jor Bagh,New Delhi. The learned D.R. further contended that the administration of the will had been completed by the executor and there was nothing left to be done ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in the case of executors was not to be made. The learned D.R. further contended that the decision of the Andhra Pradesh High Court in the case of S.M. Bhandari was inapplicable to the facts of this case as there was no residuary legacy in this case. Referring to section 211 of the Indian Succession Act, 1925, the learned D.R. contended that the property covered by a will vests with the executor or the administrator, as the legal representative of the deceased person till the property is distributed amongst the legatees. Reference was also made to sections 119, 327, 332, 333, 336 337 of the Indian Succession Act in support of the contention that the executor/administrator is bound to deliver the legacy as soon as it is practicable. The executor may not be bound to pay to any legacy, until the expiration of one year from the testator's death. However, after the expiration of one year, the executor cannot withhold the execution of the property. According to the learned D.R. the facts and circumstances of this case clearly suggest that the executor(s) had distributed the property amongst the legatees within a reasonable time and that the L DO authorities had been requested to ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x under the head ' Income from House Property '. The benefit of section 54F has been denied to the assessee by holding that she was the owner of 1/4th share of the residential property situated at 1, Jor Bagh,New Delhi. The proposition of law that once she is the owner of the property, the benefit under section 54F would not be available to the assessee, is not disputed. What is disputed is the ownership of the property which shall hereinafter be referred to as ' Jor Bagh Property '. In this connection, it is necessary for us to refer to the will executed by Mrs. S.D. Puri, the mother of the assessee in the year 1978 which was duly registered. The testator, namely, Mrs. S.D. Puri died in the year 1984. Probate of the will was granted by District Judge,Delhiunder section 289 of the Indian Succession Act XXXIX of 1925 in case No. 23 /85 vide order dated7-8-1987. Shri V.P. Puri and Shri S.L. Bawa had been appointed as executors in the said will and the District and Session Judge directed them to administer the property and to make full and true inventory of the said property and credits, execute the same within six months and to render true accounts of the said property and credits wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in clause 4. In clause 6 a sum of Rs. 10,000 each was directed to be paid to Shri Brahm Prakash Puri and Shri Gyan Prakash Puri. In clause 8 of the will provides that in case after making the distribution of wealth any amount is left then a sum of Rs. 25,000 be utilised to form a trust for the welfare or up keep of orphans and poor widows. 9. It is not disputed that effect to the contents of will was given in letter and spirit but for distribution of Jor Bagh property. The claim of the assessee is that the Jor Bagh property could not be distributed amongst the four persons referred to in clause 3(b) of the will as the land underneath an, appertenant to the said building was leasehold land and the L DO authorities had demanded 50 per cent of unearned increase before the mutation of the property could be effected. 10. We have, therefore, to ascertain as to whether there is merit in the findings of the Assessing Officer or is there any merit in the contentions raised on behalf of the assessee. In order to decide this issue, we consider it necessary to refer to the provisions of the Indian Succession Act XXXIX of 1925. Section 2(c) of the Indian Succession Act defines ' execut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld. 15. Chapter VIII of the Indian Succession Act, 1925 enunciates the time when the legatee's title become complete. Section 332 requires the assent of the executor or the administrator to complete the legatee's title in each case. Section 333 provides that an assent to a specific bequest win divest the executor or administrator of his interest in the subject-matter of the bequest and transfer the subject-matter to the legatee. Section 336 provides that an assent of the executor or the administrator gives effect to the legacy as from the date of the death of the testator. From the aforementioned provisions of the Indian Succession Act, 1925 it is clear that the executor cannot be regarded as a trustee for any legatee or beneficiary till he assents to the legacy. Whether the executor or the administrator has given the assent to the legacy is a question of fact to be determined on the facts and circumstances of each case. The assent of the executor/administrator to the legacy may be express or implied from his conduct. 16. Though no time limit is fixed by section 211 for the duration of the office of the executor with its powers and rights, the property which he has in the esta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the taxes and after meeting sundry expenditure on the estate, distributes residue amongst the remaining legatees." Though assessee had claimed that rent was being collected by the sole executor as the administrator of the estate and not as the co-owner or trustee of the legatees. The same is negatived by the fact that the rent is being collected in the joint names of Shri V.P. Puri and Smt. V.K.S. Bawa. As already pointed out, Smt. V.KS. Bawa is not the executor/administrator of the estate. M/s. Asea Brown Bowerry Ltd. the tenants of Jor Bagh property have also certified that the rental cheques are being drawn in the joint names of Shri V.P. Puri and Smt. V.KS. Bawa. Thus it is evident that the rent was not being collected by Shri V.P. Puri as administrator of the estate but as co-owner of the Jor Bagh property. 19. Another factor in this regard is the application dated4-7-1991filed by Shri V.P. Puri before the Land and Development Officer for mutation of the Jor Bagh property. This application is placed at page 22 of the paper book. We have elsewhere mentioned in this order that the counsel for the assessee had wrongly certified that the said application had been filed before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the deceased other than the assessees even the assessee does not claim that anything else had remained to be done for distributing the property covered under the will. As already mentioned elsewhere in this order the demand of Rs. 60 lakhs from L DO authorities is not sufficient to hold that the administration of the property had not been completed. 21. The decisions relied upon on behalf of the assessee are inapplicable to the facts of this case. In the case of Administrator General of West Bengal v. CIT [1965] 56 ITR 34 (SC), their Lordships of the Supreme Court held that till the administration of the estate was complete the income would not be assessable on behalf of the sons who were residuary beneficiaries and that section 41 of the Indian Income-tax Act, 1922 did not apply. In this very case their Lordships held that when the personal estate of the testator has been fully administered by his executor and residue ascertained, the residue legatee is entitled to have the residue as so ascertained, with any agreed income, transferred to him but until that time he has no property in any specific investments forming part of the estate or in the income from any such invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Estate Duty Act, their Lordships held " under the Estate Duty Act the executor is made as an accountable person who has to deliver account of the estate passing on the death ". Referring to the decision of the Hon'ble Supreme Court in the case of P. Leelavathamma v. CED [1991] 188 ITR 803 their Lordships held that though estate duty is a charge on the immovable properties passing on the death nevertheless the executor has got duty and responsibilities as an accountable person to make satisfactory arrangements for the payment of the estate duty. Their Lordships accordingly held that the administration of the estate had not been completed and, therefore, provisions of section 168(3) were applicable and assessment was to be made in the hands of the executors. 25. It becomes-necessary for us to examine in the light of the aforementioned decision of the Supreme Court, as to whether the demand of Rs. 60 lakhs by Land and Development Office was the responsibility of the executors as part of the administration of the estate of the deceased. In this connection, we may derive some guidance from the decision in the case of CWT v. P.N. Sikand [1977] 107 ITR 922 (SC). In this case, their Lord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue. The covenant in clause (13) is, therefore, clearly a covenant running with the land and it would bind whosoever is the holder of the leasehold interest for the time being. It is a constituent part of the rights and liabilities and advantages and disadvantages which go to make up the leasehold interest and it is an incident which is in the nature of burden on the leasehold interest." 26. As held by their Lordships of the Supreme Court the covenant in clause 13 of the lease deed agreement is clearly running with the land and it would bind whosever is the holder of the leasehold interest for the time being. As per the letter of the Settlement Commissioner of the L DO dated 19-6-1992 the Department had no objection for mutating the property in the name of the beneficiaries of Smt. S.D. Puri, subject to demand of 50 per cent unearned increase in respect of the property bequeath in favour of Shri S.L. Bawa, Shri V.P. Puri and Smt. Nirmala Puri. As far as the assessee is concerned, the Department had clearly admitted that she was in the direct line of succession of the testator and, therefore, there was no demand of unearned increase in respect of the portion given to her. The re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld make the title absolute and unquestionable. In this connection, it would be relevant once again even at the cost of repetition to refer to the provisions of Indian Succession Act, 1925. 29. Under section 333 of the Indian Succession Act, 1925 the assent of the executor or administrator of a specific bequest is sufficient to divest his interest as executor or administrator therein and to transfer the subject of the bequest of the legatee, unless the nature of the circumstances of the property required that it shall be transferred in a particular way. 30. Sub-section (2) of section 333 provides that assent may be verbal and it may be either express or implied from the conduct of the executor or administrator. 31. In the light of aforementioned provision of the Indian Succession Act, 1925 the contention raised on behalf of the assessee that mutation in the L DO records was necessary for the assessee for becoming owner of the property is bereft of reason and substance. The decision in the case of Bakshi Sampuran Singh relied upon by the assessee in this regard has been quoted out of context. The issue before their Lordships was not as to whether mutation of the property is n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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