TMI Blog1952 (5) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... on the Original Side of this Court for administration of the estate and accounts and in that suit he was appointed receiver by an order made on the 12th August, 1948. He took possession of the estate on the 23rd August next and it is found by the Tribunal that all the assets of the estate were handed over to him, except that the executors were allowed to retain with them the account books and a sum of ₹ 5,000 on account of certain costs and expenses. In the meantime, in December, 1946, a proceeding under the Bengal Agricultural Income-tax Act had been commenced against the executors in respect of the agricultural income of the estate for the accounting year 1352 B.S. for which the corresponding assessment year was 19465-1947. Before Asit Kumar took over the possession of the estate, the executors had already filed a return upon the service of a notice under Section 24(2) of the Act upon them. At the date he took over possession, the assessment proceeding was still pending. Even after that date, notices under Sections 24(4) and 25(2) of the Act were issued to the executors in ignorance, it is said, of the appointment of Asit Kumar as receiver. However, when subsequently th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se under the Income-tax laws taxable income could be validly assessed wherever it was found. In the present case, it was found in the hands of the assessee, because at the time when the assets of the estate were handed over to him, he must have got the agricultural income in question among other assets. The Tribunal further observed that if in a case where an executor was succeeded by a receiver or one receiver was succeeded by another, there could be no substitution of the successor in the assessment proceedings, the Income-tax Officer would have to start afresh each time a change occurred and it might well be that in certain cases the income would escape assessment altogether, the bar of limitation intervening. I have tried to set out the reasoning of the Tribunal as clearly as I could, although it lies buried under a mass of statements of general principles and some high flown language. There is not the slightest discussion of the terms of any of the sections relied on. After the decision of the Tribunal, the assessee made an application for a reference to this Court of four questions of law, between which he distributed his contentions. The Commissioner of Agricultural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned with the assessment of persons like guardians, trustees, agents, receivers and administrators who receive income on behalf of another person such as the ward, the cestui que trust, the principal, the rightful owner and the beneficiary. An executor, on the other hand, as is now well settled, does not, while the administration is still incomplete, hold the estate or receive its income on behalf of any one else, but does so on behalf of himself as the person in whom the estate lies vested at the time. Even if the executor and the trustee be the same person, he does not assume the latter character till the administration has been completed and the residuary legacy ascertained and assented to. Till then, he is liable to be assessed not in a representative capacity under the special sections of the Income-tax Act, but under the general provisions as the owner of the income: (Lord Sudeley v. The AttorneyGeneral [1897] A.C. 11, Dr. Barnardo's Homes National Incorporated Association v. Commissioners for Special Purposes of the Income Tax Acts [1921] A.C. at p. 8 and V.M. Raghavalu Naidu and Sons v. Commissioner of Income-tax Excess Profits Tax, Madras [1950] 18 I.T.R. 787). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessee received the income of the year 1352 B.S. as receiver, because in that year, which corresponds to 1945-46, he had not become a receiver at all. Apart from the question, therefore, as to whether he actually received the income in 1352 B.S. or at any time, he certainly did not receive it in 1352 as receiver and that circumstances is sufficient to exclude Section 13(b) in his case. Proceeding now to the second finding of the Tribunal that the assessment of the assessee was authorised by Section 16(2) of the Act, it is, in my opinion, equally erroneous. That section provides that nothing contained in Sections 13 and 14 shall prevent either direct assessment of a person therein referred to on whose behalf the agricultural income is received or the recovery from such person of the agricultural income-tax payable in respect of such income. Both Sections 13 and 14 contemplate assessment of persons who receive income on behalf of another and it is in respect of income so received that the other person, on whose behalf the income is received, is made equally liable to assessment. As I have already pointed out, the income of 1352 B.S. was not received by the executors in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t so and what he must have meant was that he was the sole residuary beneficiary. He gave the same description of himself in the case under the Indian Income-tax Act which went up to the Privy Council, but that description did not prevent their Lordships from referring to the terms of the will and pointing out that there were several other beneficiaries. But even it the assessee was the sole beneficiary, he would not be liable to be assessed directly under Section 16(2) unless the income had been received on his behalf by the executors and, as I have already explained the income was not so received, because the legacy of the assessee had not, at the relevant date, been ascertained and assented to. As regards the other possible basis of the Tribunal's finding, namely that the assessee actually received the income, I can see no foundation for it. It is difficult to see how it can be said that when the assets of the estate were handed over to the assessee in 1948, he must have received, among such assets, the agricultural income of the estate derived in 19845. The executors may have spent off that income on other purposes or may have withheld it or may event have misappropriated it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had complied with the notice issued under Section 24(4) was valid. The whole basis of Dr. Pal's concession was that the assessee was placed under an obligation to file a return of his agricultural income as soon as the general notice under Section 24(1) was published, and if not having filed the return at the time, he subsequently intervened in the proceedings commenced on the return filed by the executors, he might be treated as having discharged his obligation to file a return by adopting the return filed by the executors. Under Section 24(3), a return can be filed at any time before the assessment is made. But the general notice under Section 24(1) requires only those persons to file a voluntary return who had received a taxable amount of agricultural income in the year in question. If in the present case the assessee himself had received no agricultural income, taxable or otherwise, in 1352 B.S. clearly the general notice under Section 24(1) did not affect him and it placed him under no obligation to file any return. It appears to me that so far as the present proceedings were concerned the assessee was a stranger to them and the notices served upon him, whatever his own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of their testator, in whose shoes they stand. Asit Kumar as the sole residuary legatee under the will of the deceased had no vested right to any specific part of the income of the property of the deceased while it was being administered by the executors and he cannot be said to have received such income simply because Mullick and Aich as executors received the income. It is said that Mullick and Aich had become trustees under the will of Akshoy Kumar Ghose during the accounting year and therefore Asit was entitled to and must be deemed to have received the income during that year. Where a person is appointed both executor and trustee of the estate of the deceased under the will of the deceased he does not hold any part of the estate as a trustee as long as he holds it as an executor and representative of the deceased. His assent to the legacy divests his tittle to the property bequeathed and if he is also a trustee under the will thenceforth he holds it as such trustee: George Attenborough Son v. Solomon [1913] A.C. 76; Halsbury's Laws of England, 2nd Edition Vol. 14, Article 646. With regard to the residuary legacy the residue to which he can give assent must be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that as Mullick and Aich received the income by virtue of Section 16(2) Asit must also be deemed to have received that income during the accounting year. In my view Mullick and Aich were not chargeable to tax under Section 13 and 14 at all. During the accounting year Mullick and Aich were functioning as executors and they could not be said to be administrators appointed by or under any order of any court. For reasons already stated they had not become trustees at all during that year. Even assuming that they had clothed themselves with the character of trustees under the will of Akshoy Kumar Ghose, they were not trustees of a minor, lunatic, idiot or person residing without Bengal nor were they trustees appointed under a duly executed trust deed. A trustee under a will cannot be said to be a trustee appointed under a trust deed. A will is a testamentary instrument and speaks from the death of the testator whereas a deed in a nontestamentary instrument and speaks from the date of its execution. The corresponding Section 41 of the Indian Income-tax Act was amended by Section 22 of the Amending Act XXIII of 1941 so as to make it applicable to trustees appointed under a trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receiver in 1945-46. I, therefore, hold that Asit did not receive any agricultural income during the accounting year as a beneficiary or as receiver either directly or through P.C. Mullick or D.C. Aich. Asit is therefore not chargeable to tax either under Sections 5 and 6 or under Section 13(b) of the Agricultural Income-tax Act. Dr. Pal's next contention is that the assessment is bad because Asit never filed the return. The return was filed by the executors and the assessment proceedings were started against them. Dr. Pal contends that on his appointment as receiver Asit could not be substituted in place of the executors in the pending assessment proceedings and the proceedings could not be continued against him. Upon the assumption that Mullick and Aich were administrators the Appellate Tribunal seems to be of the view that the word administrator in Section 13(b) did not exclude his successor in office. Relying on Williams v. Singer [1920] 7 Tax Cas. 387 they thought that there was some general principle to this effect that the State can obtain its share of the income by the simple and effective expedient of taxing the profits where they are found. In my view the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt as receiver Asit could not be substituted in place of the executors against whom the proceedings were pending. If the position were that Asit received the income and was assessable for that income during the accounting period, it would have been his duty voluntarily to file the return under Section 24(1) of the Bengal Agricultural Income-tax Act. In such a case it may be that if he voluntarily appeared in the assessment proceedings and proceeded on the footing that the return previously filed by another person was his own he might be assessed as if he had filed the return. The assessment then would be on the basis that he had filed the return and not on the basis that he could be substituted in the assessment proceedings on the analogy of Order XXII of the Code of Civil Procedure. But the position here is fundamentally different. Asit never received the income and was never liable to pay it. There are special provisions such as Sections 26 and 28 of the Bengal Agricultural Income-tax Act which make the executor, the reconstituted firm and the successor of a business liable for tax though they have not received it. There is no special provision in the Bengal Agricultural Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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