TMI Blog1962 (10) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... ment in regard to those years. - - - - - Dated:- 23-10-1962 - JUDGMENT The judgment of the court was delivered by KAPUR J. These appeals pursuant to a certificate of the High Court of Bombay raise the question of interpretation of section 24B of the Income-tax Act in an income-tax reference. The question referred was answered in the negative and against the Commissioner of Income-tax who is the appellant in these appeals, the respondents being the heirs and legal representatives of one Amarchand N. Shroff, deceased. The appeals relate to the assessment years 1950-51, 195152, 1952-53, 1953-54 and 1954-55. Shortly stated the facts of the case are these : Amarchand N. Shroff, Mangaldas and Hiralal were partners in a firm of solicitors. Amarchand died on July 7, 1949. Thereafter the partnership was carried on by Mangaldas and Hiralal up to November 30, 1949, and on December 1, 1949, Ramesh, son of Amarchand, who had by then qualified as a solicitor joined the firm as the third partner. After the death of Amarchand the arrangement between the various partners in regard to the realisations of the old outstandings was that in respect of the work done up to the death of Amarchand t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the Commissioner of Incometax the following question of law was referred to the High Court : "Whether, on the facts and in the circumstances of the case, the sum of Rs. 37,847, Rs. 43,162, Rs. 34,899, Rs. 13,402 and Rs. 32,523 were assessable to income-tax in the hands of the assessee 'Amarchand N. Shroff, by his legal heirs and representatives' in the five respective years under reference ?" The High Court answered the question in the negative. It held that apart from section 24B of the Income-tax Act the amounts were not taxable and that the section had no application to the case. It was argued by counsel for the Commissioner of Income-tax that on a correct interpretation of section 24B the amounts which were received by the heirs and legal representatives of Amarchand after his death should be deemed by the fiction incorporated in subsection (1) to be income received by Amarchand and liable to tax under section 24(1) of the Income-tax Act. In other words, the respondents as heirs and legal representatives of the deceased, Amarchand, were liable to pay out of the estate of the deceased, Amarchand, on those amounts to the extent of the estate, as the estate was liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words of sub-section (1) "or any tax which would have been payable by him under this Act if he had not died" mean that irrespective of the date of receipt of income receivable by a person, if the income is received by his heirs and legal representatives after his death, they are liable for payment of the tax just as the deceased would have been liable when the income was received had he been living. But this interpretation is not in accord with the language used in section 24B. All the sub-sections have to be read together. Sub-section (1) can be divided into two parts : (1) where the income of the deceased was assessed before his death and (2) where the income was not so assessed but it would have been liable to tax had he not died. The second part or the words above quoted when read with sub-section (2) and (3) show that they are confined to cases therein mentioned. They show that those words also have to be restricted to the income received by the deceased person before his death and to the income received after his death by his heirs and legal representatives but in the "previous' year and which had not been assessed but would have been assessed as income received by him if dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal personality of a deceased assessee is extended for the duration of the entire previous year in the course of which he died and therefore the income received by him before his death and that received by his heirs and legal representatives after his death but in that previous year becomes assessable to income-tax in the relevant assessment year. The section was enacted by the legislature to bring to tax, after his death, income received during his lifetime, and fill up the lacuna which was pointed out by the High Court in Ellis C. Reid v. Commissioner of Income-tax [1930] 5 I.T.C. 100. Any income received in the year subsequent to the previous or the account year cannot be called income received by the person deceased. The provisions of section 24B do not extend to tax liability of the estate of a deceased person beyond the previous or the account year in which that person dies. In support if his contention counsel for the Commissioner of Income-tax relied upon the scheme of the Act as given Additional Income-tax Officer v. E. Alfred [1946] 14 I.T.R. 10. There is nothing said in that case which supports the contention raised by the Commissioner of Income-tax. Reliance was next ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 930] 5 I.T.C. 100. In that case, and that was a case before section 24B was enacted, a person was served with a notice under section 22(2) of the Income-tax Act but no return was made within the period specified and he died. It was held that no assessment could be made under section 23(4) of the Act after his death. At page 106 it was observed : "It is to be noticed that there is throughout the Act no reference to the decease of a person on whom the tax has been originally charged, and it is very difficult to suppose the omission to have been unintentional. It must have been present in the mind of the Legislature that whatever privileges the payment of income-tax may confer, the privilege of immortality is not amongst them. Every person liable to pay tax must necessarily die and, in practically every case, before the last installment has been collected, and the Legislature has not chosen to make any provisions expressly dealing with assessment of, or recovering payment from, the estate of a deceased person." The individual assessee has ordinarily to be a living person and there can be no assessment on a dead person and the assessment is a charge in respect of the income of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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