TMI Blog1991 (2) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Indian Succession Act, or as a reason of the legal obligation in the nature of a trust created under the will ? 2. Whether the Appellate Tribunal ought not to have held that even if the income arising from the estate be received on behalf of the creditors, the trustees would be assessable on this income under section 41 (1) of the Indian Income-tax Act, 1922/164(1) of the Income-tax Act, 1961 ? and 3. Whether, in the facts and circumstances of the case, the miscellaneous application dated November 26, 1975, on behalf of the Department was maintainable ? The late Shri Ramkumar Jalan was a partner in a few firms. He executed a will on April 21, 1951, in terms of which he bequeathed all his properties that he might possess at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the share income was not the estate's income. Thus, the claim was that the share income never reached the estate as income, it being diverted at source. The claim was rejected by the Income-tax Officer as well as the Appellate Assistant Commissioner. On further appeal, the Tribunal set aside the orders of the Appellate Assistant Commissioner and restored the appeals to the file of the Appellate Assistant Commissioner for disposal afresh. By his subsequent order dated July 31, 1972, the Appellate Assistant Commissioner again dismissed the assessee's appeals. When the appeals came up before the Tribunal for the second time, the Tribunal accepted the claim observing that the will left the assessees with no option but to utilise the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of CIT v. Sitaldas Tirathdas [1961] 41 ITR 367, Shri Jetley, stated that the mere fact that the assessee had an obligation to discharge the debts and liabilities of the deceased did not, by itself, mean that there was any charge on the income or that the income did not accrue to the assessee or that it was diverted by an overriding obligation. He also placed reliance on our court's judgment in the case of CIT v. State Bank of India [1988] 169 ITR 298. In that case, the question involved was whether, to the extent of estate duty liability, income could be said to have been diverted. Our court had held that it was not diverted. Reliance was also placed on other decisions such as Vibhuti Glass Works v. CIT [1989] 177 ITR 439 (SC) and CIT v. Sm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who receives the estate of the deceased, that is, both the assets and the liabilities. The provisions in the will also, as referred to by different authorities, to our mind, do not create any further obligation. The will only requires that the estate should first be applied for the purpose of discharging the deceased's liabilities. Apart from the fact that it does not contain any provision by which diversion of assets can be spelt out, there is no whisper whatsoever in the will about the income that accrued to the estate. At best, the income of the estate is liable to be utilised for discharging the liabilities of the estate. There is no special charge or obligation on the income as distinct from the estate. It cannot, therefore, be accepte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 41 ITR 367, if applied properly, goes against the claim. At this stage, Shri Dalvi stated that the claim for interest at least to the extent of interest on the principal amount of liabilities, if any, should be directed to be allowed. We are afraid, that in the absence of any material on record, it is not possible to accept Shri Dalvi's submission, particularly as there is no discussion about this claim in the order of the Tribunal and the questions of law referred to us do not cover this aspect. Accordingly, the first question of law is answered in the negative and in favour of the Revenue. In view of our answer to question No. 1, questions Nos. 2 and 3 do not survive. Hence, they are not answered. No order as to costs. - - TaxTM ..... X X X X Extracts X X X X X X X X Extracts X X X X
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