CIT VS SMT. P. DHANALAKSHMI
AND OTHERS
AND OTHERS
DATED : 24.11.1994
Summarised
Judgement (Scroll for Complete Judgement)
Judgement (Scroll for Complete Judgement)
Introduction :
“(1)
Whether, on the facts and in the circumstances of the case, the Appellate
Tribunal was justified in law in holding that the income of the estate of the
deceased person, subsequent to the date of death, ins assessable under the
section 168 of the Act in the hands of the executor ?
Whether, on the facts and in the circumstances of the case, the Appellate
Tribunal was justified in law in holding that the income of the estate of the
deceased person, subsequent to the date of death, ins assessable under the
section 168 of the Act in the hands of the executor ?
Facts of the Case :
The death
of the deceased, his legal heirs succeeded to his estate. Each of them will be
entitled to one-sixth share in the estate, and each one of them is an assessee
on the file of the Income-tax Officer. The income derived from the property is
assessable under section 26 of the Act, in the hands of each individual in
accordance with the share of income derived by them from the property. If
section 168 is not applicable in the case of intestate succession, then the
property income has got to be assessed under section 26 of the Act, in the
hands of each of the individuals in accordance with the share of income derived
by them from the estate of the deceased.
of the deceased, his legal heirs succeeded to his estate. Each of them will be
entitled to one-sixth share in the estate, and each one of them is an assessee
on the file of the Income-tax Officer. The income derived from the property is
assessable under section 26 of the Act, in the hands of each individual in
accordance with the share of income derived by them from the property. If
section 168 is not applicable in the case of intestate succession, then the
property income has got to be assessed under section 26 of the Act, in the
hands of each of the individuals in accordance with the share of income derived
by them from the estate of the deceased.
Judgement :
In the
present case, the deceased has not left a will bequeathing the property to any
of the legatees. In such circumstances, since the succession in the present
case happens to be an intestate succession, section 168 of the Act cannot be
made applicable to make an assessment in a representative capacity. In that
view of the matter, we answer the questions referred to us in the negative and
in favour of the Department.
present case, the deceased has not left a will bequeathing the property to any
of the legatees. In such circumstances, since the succession in the present
case happens to be an intestate succession, section 168 of the Act cannot be
made applicable to make an assessment in a representative capacity. In that
view of the matter, we answer the questions referred to us in the negative and
in favour of the Department.
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MADRAS HIGH COURT
CIT VS SMT. P. DHANALAKSHMI
AND OTHERS
AND OTHERS
DATED : 24.11.1994
Equivalent
citations: 1995 215 ITR 662 Mad
citations: 1995 215 ITR 662 Mad
JUDGMENT :
1. At the
instance of the Department under section 256(1) of the Income-tax Act, 1961,
the Tribunal referred to following questions for our opinion :
instance of the Department under section 256(1) of the Income-tax Act, 1961,
the Tribunal referred to following questions for our opinion :
“(1)
Whether, on the facts and in the circumstances of the case, the Appellate
Tribunal was justified in law in holding that the income of the estate of the
deceased person, subsequent to the date of death, ins assessable under the
section 168 of the Act in the hands of the executor ?
Whether, on the facts and in the circumstances of the case, the Appellate
Tribunal was justified in law in holding that the income of the estate of the
deceased person, subsequent to the date of death, ins assessable under the
section 168 of the Act in the hands of the executor ?
(2) Whether,
on the facts and in the circumstances of the case, the Appellate Tribunal was
justified in holding that in view of the application of section 168, there is
no scope for application of section 26 and that the estate for the purpose of
assessment under section 168 is to be considered as a single estate without any
right of co-ownership ?”
on the facts and in the circumstances of the case, the Appellate Tribunal was
justified in holding that in view of the application of section 168, there is
no scope for application of section 26 and that the estate for the purpose of
assessment under section 168 is to be considered as a single estate without any
right of co-ownership ?”
2. One K.
Periaswamy, who was being assessed in the status of individual up to the
assessment year 1975-76, died on August 28, 1975. His wife, P. Balammal,
assessee in R.A. No. 1367/ (Mds) of 1980, his mother, Meenakshi, assessee in
R.A. No. 1366/ (Mds) of 1980 and four daughters, one of whom, P. Dhanalakshmi,
assessee in R.A. No. 1365/ (Mds) of 1980, are the legal representatives of the
deceased, K. Periaswamy.
Periaswamy, who was being assessed in the status of individual up to the
assessment year 1975-76, died on August 28, 1975. His wife, P. Balammal,
assessee in R.A. No. 1367/ (Mds) of 1980, his mother, Meenakshi, assessee in
R.A. No. 1366/ (Mds) of 1980 and four daughters, one of whom, P. Dhanalakshmi,
assessee in R.A. No. 1365/ (Mds) of 1980, are the legal representatives of the
deceased, K. Periaswamy.
The deceased Periaswamy owned a building at Karur
along with his brother, Ponnusamy, in equal shares. He was also a partner in
the firms Amarjothi Fabrics and Amarjothi Traders, who were carrying on
business in textiles. He retired from the partnership and the amounts due to
him were held by the firms as deposits. He was getting interest from the firms
out of the deposits. In the assessment year 1976-77, his wife, Balammal, filed
a return, disclosing an income of Rs. 34,302 made up of Rs. 6,876 being income
from property and Rs. 27,426 being income by way of interest for the period
after the death of Periaswamy. In the return, Balammal claimed herself to be
the administrator of the estate of the deceased.
along with his brother, Ponnusamy, in equal shares. He was also a partner in
the firms Amarjothi Fabrics and Amarjothi Traders, who were carrying on
business in textiles. He retired from the partnership and the amounts due to
him were held by the firms as deposits. He was getting interest from the firms
out of the deposits. In the assessment year 1976-77, his wife, Balammal, filed
a return, disclosing an income of Rs. 34,302 made up of Rs. 6,876 being income
from property and Rs. 27,426 being income by way of interest for the period
after the death of Periaswamy. In the return, Balammal claimed herself to be
the administrator of the estate of the deceased.
According
to the assessee, the estate of the deceased devolved upon his heirs at law,
viz., his wife, mother and four daughters, and they have not divided the same
by metes and bounds. Therefore, the assessment was required to be made in
respect of such income under section 168 of the Income-tax Act, 1961, in the representative
capacity. However, the Income-tax Officer did not accept the contention put
forward by the assessee. The Income-tax Officer was of the view that on the
death of the deceased, his heirs succeeded to the properties under section 8 of
the Hindu Succession Act. The Income-tax Officer pointed out that they took the
estate as tenants-in-common, as provided under section 19(b) of the Hindu
Succession Act. Consequently, each of them was entitled to one-sixth of the
income, and since the deceased had died intestate, one-sixth of the income was
liable to be assessed in the hands each heir.
to the assessee, the estate of the deceased devolved upon his heirs at law,
viz., his wife, mother and four daughters, and they have not divided the same
by metes and bounds. Therefore, the assessment was required to be made in
respect of such income under section 168 of the Income-tax Act, 1961, in the representative
capacity. However, the Income-tax Officer did not accept the contention put
forward by the assessee. The Income-tax Officer was of the view that on the
death of the deceased, his heirs succeeded to the properties under section 8 of
the Hindu Succession Act. The Income-tax Officer pointed out that they took the
estate as tenants-in-common, as provided under section 19(b) of the Hindu
Succession Act. Consequently, each of them was entitled to one-sixth of the
income, and since the deceased had died intestate, one-sixth of the income was
liable to be assessed in the hands each heir.
3. The
daughter of the assessee preferred an appeal before the Commissioner of
Income-tax (Appeals). Before the Commissioner (Appeals), the assessee submitted
that since Balammal was administering the estate left by the deceased and since
the estate had not been partitioned among the heirs of the deceased, the
assessment should be made under section 168 of the Income-tax Act. The
Commissioners of Income-tax (Appeals) also rejected the contention put forward
by the assessee. According to the Commissioner of Income-tax (Appeals), since
Balammal had not been granted letters of administration by any competent
authority as required by section 218 of the Indian Succession Act, she could
not be considered as an “executor” for the purpose of section 168.
Consequently, the commissioner of Income-tax (Appeals) held that no assessment
can be made under section 168 in the representative capacity.
daughter of the assessee preferred an appeal before the Commissioner of
Income-tax (Appeals). Before the Commissioner (Appeals), the assessee submitted
that since Balammal was administering the estate left by the deceased and since
the estate had not been partitioned among the heirs of the deceased, the
assessment should be made under section 168 of the Income-tax Act. The
Commissioners of Income-tax (Appeals) also rejected the contention put forward
by the assessee. According to the Commissioner of Income-tax (Appeals), since
Balammal had not been granted letters of administration by any competent
authority as required by section 218 of the Indian Succession Act, she could
not be considered as an “executor” for the purpose of section 168.
Consequently, the commissioner of Income-tax (Appeals) held that no assessment
can be made under section 168 in the representative capacity.
He,
accordingly, confirmed the view taken by the Income-tax Officer that one-sixth
of the income accruing from the estate of the deceased should be assessed in
each of the heirs of the deceased. Aggrieved, the assessee filed an appeal
before the Appellate Tribunal and the Department also preferred appeals before
the Tribunal. The Tribunal fond that the estate of the deceased is being
factually administered by the wife of the deceased. It is also not disputed
that no partition took place among the heirs of the deceased.
accordingly, confirmed the view taken by the Income-tax Officer that one-sixth
of the income accruing from the estate of the deceased should be assessed in
each of the heirs of the deceased. Aggrieved, the assessee filed an appeal
before the Appellate Tribunal and the Department also preferred appeals before
the Tribunal. The Tribunal fond that the estate of the deceased is being
factually administered by the wife of the deceased. It is also not disputed
that no partition took place among the heirs of the deceased.
Therefore,
the Tribunal came to the conclusion that in view of the Explanation to section
168 of the Act, the assessee should be assessed under section 168 of the Act.
In that view of the matter, the Appellate Tribunal set aside the order passed
by the Commissioner of Income-tax (Appeals) and allowed the appeals filed by
the assessee, and dismissed the appeals filed by the Department.
the Tribunal came to the conclusion that in view of the Explanation to section
168 of the Act, the assessee should be assessed under section 168 of the Act.
In that view of the matter, the Appellate Tribunal set aside the order passed
by the Commissioner of Income-tax (Appeals) and allowed the appeals filed by
the assessee, and dismissed the appeals filed by the Department.
4. Before
this court, learned standing counsel for the Department submitted that section
168 of the Act would apply only in the case of testamentary succession.
According to learned counsel, for intestate succession, section 168 has no
application. Learned counsel further submitted that according to the
Explanation to section 168, the executor must be a person appointed by the
court and a person, who, in fact, is administering the estate, is not entitled
to claim to be the executor or administrator under section 168 of the Act.
this court, learned standing counsel for the Department submitted that section
168 of the Act would apply only in the case of testamentary succession.
According to learned counsel, for intestate succession, section 168 has no
application. Learned counsel further submitted that according to the
Explanation to section 168, the executor must be a person appointed by the
court and a person, who, in fact, is administering the estate, is not entitled
to claim to be the executor or administrator under section 168 of the Act.
Therefore,
it is the contention of learned counsel appearing for the Department that
unless the executor or the administrator is appointed by the court, in the
matter of testamentary succession, assessment cannot be made under section 168
of the Act, in the representative capacity. In the present case, learned
counsel pointed out that the succession is only intestate and as soon as the
deceased died, the estate would have devolved upon the legal heirs, since
succession cannot be kept in abeyance after the death of the deceased. It was,
therefore, submitted that in the present case, it is not possible to make an
assessment under section 168 of the Income-tax Act. On the other hand, none was
present on behalf of the assessee.
it is the contention of learned counsel appearing for the Department that
unless the executor or the administrator is appointed by the court, in the
matter of testamentary succession, assessment cannot be made under section 168
of the Act, in the representative capacity. In the present case, learned
counsel pointed out that the succession is only intestate and as soon as the
deceased died, the estate would have devolved upon the legal heirs, since
succession cannot be kept in abeyance after the death of the deceased. It was,
therefore, submitted that in the present case, it is not possible to make an
assessment under section 168 of the Income-tax Act. On the other hand, none was
present on behalf of the assessee.
5. We have
heard learned standing counsel appearing for the Department and perused the
records carefully.
heard learned standing counsel appearing for the Department and perused the
records carefully.
6. The
facts remain that one K. Periaswamy died on August 28, 1975, leaving behind
him, his wife, P. Balammal, his mother, Meenakshi, and his four daughters. All
of them are assessees in their individual capacity. Accordingly, Balammal filed
a return stating that the assessment should be made under section 168 of the
Act, since no partition took place among the heirs of the deceased. Further,
according to the said Balammal, the estate was, in fact, administered by her as
contemplated under Explanation to section 168 of the Act.
facts remain that one K. Periaswamy died on August 28, 1975, leaving behind
him, his wife, P. Balammal, his mother, Meenakshi, and his four daughters. All
of them are assessees in their individual capacity. Accordingly, Balammal filed
a return stating that the assessment should be made under section 168 of the
Act, since no partition took place among the heirs of the deceased. Further,
according to the said Balammal, the estate was, in fact, administered by her as
contemplated under Explanation to section 168 of the Act.
Therefore,
the assessment should be made in the representative capacity under section 168
of the Act. On the other hand, it is the contention of the Department that
section 168 of the Act would apply only in the case of a testamentary
succession. In the case of intestate succession, section 168 of the Act has no
application.
the assessment should be made in the representative capacity under section 168
of the Act. On the other hand, it is the contention of the Department that
section 168 of the Act would apply only in the case of a testamentary
succession. In the case of intestate succession, section 168 of the Act has no
application.
7. The
Tribunal, considering the fact that the said Balammal was the de facto
administrator of the estate, held that the assessment can be made in accordance
with Explanation to section 168 of the Act. It remains to be seen that the
Explanation under section 168 of the Act states that it would be applicable
only in the case of the specific legatee. Legatees are entitled to succeed to
the estate in accordance with the terms of the will. In the present case, the deceased
has not executed any will in favour of the legatees. In the absence of the fact
that the succession is a testamentary succession, section 168 of the Act cannot
be made applicable. The Explanation to section 168 states that in this section
“executor” includes an administrator or other person administering
the estate of a deceased person. This does not mean that the administrator
includes the de factor administrator.
Tribunal, considering the fact that the said Balammal was the de facto
administrator of the estate, held that the assessment can be made in accordance
with Explanation to section 168 of the Act. It remains to be seen that the
Explanation under section 168 of the Act states that it would be applicable
only in the case of the specific legatee. Legatees are entitled to succeed to
the estate in accordance with the terms of the will. In the present case, the deceased
has not executed any will in favour of the legatees. In the absence of the fact
that the succession is a testamentary succession, section 168 of the Act cannot
be made applicable. The Explanation to section 168 states that in this section
“executor” includes an administrator or other person administering
the estate of a deceased person. This does not mean that the administrator
includes the de factor administrator.
While
considering a question of a similar nature in Mahamaya Dassi v. CIT [1980] 126 ITR
748, the Calcutta High Court held that section 247 only contemplates the
preservation of the property until the question as to the existence or the
validity of the will is determined. An administrator pendente lite gets any
right or authority not on the death of the testator but from the date of
appointment and by virtue of appointment by the appropriate court. In view of
the nature and duties required to be performed by the administrator pendente
lite appointed under section 247 of the Succession Act and in view of the
circumstances under which administration pendente lite can be made, an
administrator pendent lite is not an administrator as contemplated by section
168 of the Income-tax Act and section 168 will not apply to him.
considering a question of a similar nature in Mahamaya Dassi v. CIT [1980] 126 ITR
748, the Calcutta High Court held that section 247 only contemplates the
preservation of the property until the question as to the existence or the
validity of the will is determined. An administrator pendente lite gets any
right or authority not on the death of the testator but from the date of
appointment and by virtue of appointment by the appropriate court. In view of
the nature and duties required to be performed by the administrator pendente
lite appointed under section 247 of the Succession Act and in view of the
circumstances under which administration pendente lite can be made, an
administrator pendent lite is not an administrator as contemplated by section
168 of the Income-tax Act and section 168 will not apply to him.
8. A
similar question came up for consideration before this court in A, and F.
Harvey Ltd. v. CWT [1977] 107 ITR 326, wherein, while considering the
provisions of section 19A of the Wealth-tax Act, 1957, which is corresponding
to section 168 of the Income-tax Act, this court held “that if he had died
intestate, the estate would have gone to his heirs, and, therefore, it is in
the hands of the heirs that the assessment will have to be made and not in the
hands of anybody else. Consequently, section 19A is confined only to a case
where an assessee dies after executing a will and appointing an executor or
executors. In such a case, section 19A provides for the assessment of the
estate of the deceased in the hands of the executor or executors till the
administration is completed.
similar question came up for consideration before this court in A, and F.
Harvey Ltd. v. CWT [1977] 107 ITR 326, wherein, while considering the
provisions of section 19A of the Wealth-tax Act, 1957, which is corresponding
to section 168 of the Income-tax Act, this court held “that if he had died
intestate, the estate would have gone to his heirs, and, therefore, it is in
the hands of the heirs that the assessment will have to be made and not in the
hands of anybody else. Consequently, section 19A is confined only to a case
where an assessee dies after executing a will and appointing an executor or
executors. In such a case, section 19A provides for the assessment of the
estate of the deceased in the hands of the executor or executors till the
administration is completed.
However, the Bombay High Court in CIT v. Usha D.
Shah [1981] 127 ITR 850 held that the term “executor” is not to be
understood in the restricted sense as the Explanation to the section gives an
extended meaning to the word “executor”, so as to include an
administrator or other person, administering the estate of the deceased person,
that is, one who is in de facto management of the property of the deceased
person. This judgment of the Bombay High Court was later on explained by the
same High Court in a subsequent decision in CWT v. Keshub Mahindra [1983] 139
ITR 22 in the following manner (at page 46) : “We have already pointed out
that section 19A is a special provision, and unless a person falls within the
provisions of section 19A, it will not be possible to give him the benefit of
section 19A, the operation of which, we have found, is attracted only in a case
where the deceased has left a will”. No argument can, therefore, be
advanced in favour of the contention raised by the assessee on the basis of a
decision in Mrs. Usha D. Shah’s case [1981] 127 ITR 850 (Bom).
Shah [1981] 127 ITR 850 held that the term “executor” is not to be
understood in the restricted sense as the Explanation to the section gives an
extended meaning to the word “executor”, so as to include an
administrator or other person, administering the estate of the deceased person,
that is, one who is in de facto management of the property of the deceased
person. This judgment of the Bombay High Court was later on explained by the
same High Court in a subsequent decision in CWT v. Keshub Mahindra [1983] 139
ITR 22 in the following manner (at page 46) : “We have already pointed out
that section 19A is a special provision, and unless a person falls within the
provisions of section 19A, it will not be possible to give him the benefit of
section 19A, the operation of which, we have found, is attracted only in a case
where the deceased has left a will”. No argument can, therefore, be
advanced in favour of the contention raised by the assessee on the basis of a
decision in Mrs. Usha D. Shah’s case [1981] 127 ITR 850 (Bom).
9.
Therefore, it remains to be seen that section 168 of the Act applies to a case
where succession is a testamentary succession. But, in the case of intestate
succession, section 168 will have no application.
Therefore, it remains to be seen that section 168 of the Act applies to a case
where succession is a testamentary succession. But, in the case of intestate
succession, section 168 will have no application.
10. It is
the case of the Department that in the present case, after the death of the
deceased, his legal heirs succeeded to his estate. Each of them will be
entitled to one-sixth share in the estate, and each one of them is an assessee
on the file of the Income-tax Officer. The income derived from the property is
assessable under section 26 of the Act, in the hands of each individual in
accordance with the share of income derived by them from the property. If
section 168 is not applicable in the case of intestate succession, then the
property income has got to be assessed under section 26 of the Act, in the
hands of each of the individuals in accordance with the share of income derived
by them from the estate of the deceased.
the case of the Department that in the present case, after the death of the
deceased, his legal heirs succeeded to his estate. Each of them will be
entitled to one-sixth share in the estate, and each one of them is an assessee
on the file of the Income-tax Officer. The income derived from the property is
assessable under section 26 of the Act, in the hands of each individual in
accordance with the share of income derived by them from the property. If
section 168 is not applicable in the case of intestate succession, then the
property income has got to be assessed under section 26 of the Act, in the
hands of each of the individuals in accordance with the share of income derived
by them from the estate of the deceased.
11. In the
present case, the deceased has not left a will bequeathing the property to any
of the legatees. In such circumstances, since the succession in the present
case happens to be an intestate succession, section 168 of the Act cannot be
made applicable to make an assessment in a representative capacity. In that
view of the matter, we answer the questions referred to us in the negative and
in favour of the Department.
present case, the deceased has not left a will bequeathing the property to any
of the legatees. In such circumstances, since the succession in the present
case happens to be an intestate succession, section 168 of the Act cannot be
made applicable to make an assessment in a representative capacity. In that
view of the matter, we answer the questions referred to us in the negative and
in favour of the Department.
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