TMI Blog1979 (4) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 1967-68 46,492 1968-69 89,600 1969-70 11,360 1970-71 3,200 It was claimed before the ITO that the aforesaid fees due to the deceased received after his death by the legal representative was not liable to be taxed in his hands and reliance was placed on the decisions of the Supreme Court in CIT v. Amarchand N. Shroff [1963] 48 ITR 59 (SC)and CIT v. James Anderson [1964] 51 ITR 345. It was further urged before the ITO that the liability of the executor was limited to the income received from the date of death of the deceased to the end of previous year, that there was no appropriate machinery to implement the provisions of s. 176 of the I.T. Act, 1961, that the provisions of the said section were, at any rate, discriminatory in so far as it imposed liability to professional income only and not business income and that, in any event, even if the professional income rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al representative is in violation of s. 476(5) and that under s. 168 of the I.T. Act, only the income of the estate of the deceased in the hands of the executor could be taxed. On behalf of the revenue, it was contended that arrears of professional income due to the deceased constitute the income of the estate within the meaning of s. 168 of the I.T. Act, 1961, and, therefore, the ITO was justified in including the arrears of professional fees received by the executor as the income of the estate for all the assessment years in question. It was also contended by the revenue that under s. 176(4) the professional income received after the death of the person carrying on the profession should be deemed to be the income of the recipient, that the word " recipient " occurring in s. 176(5) would also include an executor as in this case and that, therefore, there is no legal flaw in assessing the professional income of the deceased in the hands of the executor. After due consideration of the above rival contentions, the Tribunal took the view that the arrears of professional fees in respect of the profession which the deceased carried on till his death constituted part of his estate an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any sum received by the executor after the discontinuance of profession by reason of the death of the person concerned or otherwise and that, in this case, the executor having received income of the estate as well as the professional fees due to the deceased both are assessable in his hands and that the professional fees received after the death of the deceased need not be separately assessed in his hands and it is only on that basis that the legal fees received was assessed under the head " Profession ". The AAC upheld the assessment on the reasoning that such professional fees received should be deemed to be the income of the estate and charged to tax if such sum could have been included in the total income of the deceased had it been received before his death and that as the executor received the arrears of professional fees as also other income from the estate of the deceased, the ITO was justified in clubbing the arrears of professional fees with the other income from the estate of the deceased in the hands of the executor. The Tribunal, however, had taken the view that s. 168 will not apply to the facts of this case as the arrears of professional fees due to the deceased can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al fiction contained in s. 24B will not extend to tax the amounts received by the legal representatives after the relevant accounting year during which the death of the concerned person took place. In CIT v. James Anderson [1964] 51 ITR 345 (SC), a deceased holding some shares in a bank died in 1945, leaving a will and appointing the bank as executor. The bank obtained probate of the said will and appointed the assessee as its attorney to administer the estate of the deceased in British India and the said attorney obtained letters of administration in India. Under s. 23A of the Indian I.T. Act, 1922, certain amounts were deemed to have been distributed as dividends to the legal representatives. The ITO added the deemed dividends as the income of the administrator. When that assessment was challenged before the Supreme Court it was held that the assessment made on the administrator was not valid in law because, (1) the fictional extension of the legal personality of the deceased for the purpose of assessment under s. 24B of the Indian I.T. Act, 1922, came to an end at the end of the accounting year in which the deceased died and no tax could be levied on the assessee under s. 24B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case with the provisions of the 1961 Act. Under the 1961 Act, some of the lacunae pointed out by the Supreme Court in the above three decisions have been removed. Section 24B of the 1922 Act corresponds to s. 159 of the 1961 Act. Section 159, however, deals with legal representatives other than an executor, and in respect of assessments on executors, a separate provision under s. 168 has been made. Section 168(1) of the I.T. Act, 1961, is in the following terms : " Subject as hereinafter provided, the income of the estate of a deceased person shall be chargeable to tax in the hands of the executor,- (a) if there is only one executor, then, as if the executor were an individual ; or (b) if there are more executors than one, then, as if the executors were an association of persons, and for the purposes of this Act, the executor shall be deemed to be resident or non-resident according as the deceased person was a resident or non-resident during the previous year in which his death took place." As per this section, the income of the estate of the deceased shall be chargeable to tax in the hands of the executor. However, we are inclined to agree with the Tribunal that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the firm in which he was a partner, they cannot be treated as income of the deceased and taxed in the hands of the legal representative and that the Act did not contain any provision making a successor in business or the legal representative of an assessee to whom an allowance had already been granted, liable to tax under s. 41(1) in respect of the amount remitted and received by the successor or the legal representative. As per this decision, the legal personality stops with the death and it cannot continue thereafter. It is contended by the learned counsel for the revenue that s. 168 must be read along with s. 176(4) and if so read the charge under s.176 is independent. Dealing with s. 176(4), the Calcutta High Court in Mrs. Roma Bose v. ITO [1974] 95 ITR 299 had expressed the view that if an income cannot be charged to income-tax under any of the heads mentioned in cls. (a) to (e) of s. 14 of the new Act, the same shall be chargeable to income-tax under the head " Income from other sources " mentioned in cl. (f) of the said s. 14, and that the money received by a person on account of arrears of fees from a profession which had been carried on by him cannot be brought to charg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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