Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1964 Supreme(SC) 250

SUPREME COURT OF INDIA
6th October, 1964
K. SUBBA RAO, J.C. SHAH AND S.M. SIKRI, JJ.
The Administrator General of West Bengal, for the Estate of Raja P. N. Tagore, Appellant
Versus
Commissioner of Income tax West Bengal, Respondent.
Civil Appeals No. 168 to 169 of 1964.
Advocates appeared
Mr. A. V. Viswanatha Sastri, Senior Advocate, (M/s. K. Rajendra Chaudhuri, M. Rajagopal and K. R. Chaudhuri, Advocates, with him), for Appellant (in C. A. No.168 of 1964), M/s. K.Rajendra Chaudhuri and K. R. Chaudhuri, Advocates, for Appellant (in C. A. No.169 of 1964); Mr. C. K. Daphtary, Attorney-General for India (M/s. R. Ganapathy Iyer, R. H. Dhebar and R. N. Sachthey, Advocates, with him), for Respondent (in C.As. Nos. 168 to 169 of 1964).

Advocates:
A.V.VISHWANATHA SASTRI, C.K.DAFTARY, K.R.CHAUDHARY, K.RAJENDRA CHAUDHARY, M.RAJAGOPAL, R.Ganapathy Iyer

An Administrator General, appointed de bonis non, is in no way different from an executor vis-à-vis the income he receives from the estate. S. 41 of the Indian Income-tax Act, 1922, applies only when the Administrator General receives income on behalf of a person or persons.

Headnote:
INCOME TAX - Assessment of Administrator General - Whether income received on behalf of beneficiaries - Applicability of S. 41 of the Indian Income-tax Act, 1922.
Fact of the Case:

Raja Profulla Nath Tagore died leaving a Will, appointing five sons as residuary legatees. Administration of the estate was not completed during the relevant assessment years. The Administrator General, appointed by the Court, filed returns showing income from the estate, claiming that it was specifically receivable on behalf of the five sons. The Income-tax Officer and Appellate Assistant Commissioner rejected the claim, holding that the Administrator General was assessable as an executor.
Finding of the Court:

The High Court held that S. 41 of the Act applied, and the income was assessable in the hands of the Administrator General at the maximum rate, as the shares of the beneficiaries were indeterminate.
Issues: 1. Whether the Administrator General received the income on behalf of the beneficiaries, making S. 41 of the Act applicable? 2. If S. 41 is applicable, whether the shares of the beneficiaries were indeterminate, attracting the proviso to the section.
Ratio Decidendi: 1. S. 41 of the Act applies only when the Administrator General receives income on behalf of a person or persons. 2. During the administration of the estate, the Administrator General did not receive the income on behalf of the five sons, but on his own behalf, with discretion to use it for various purposes, including paying legacies and meeting expenses. 3. The residuary beneficiaries had no interest in the estate until the residue was ascertained, and the income received by the Administrator General was not their income but part of the residue.
Final Decision: The appeals were dismissed, holding that S. 41 of the Act was not applicable, and the income was assessable in the hands of the Administrator General.

Judgment

SIKRI, J.: These are two appeals by certificates under S. 66A(2) of the Indian Income-tax Act, 1922, against the judgment of the High Court at Calcutta, answering two questions referred to it by the Income-tax Appellate Tribunal against the appellant. The two questions are :

Whether on the facts and in the circumstances of the case, the assessments on the Administrator General of West Bengal as an individual and not as representing the shares of the various beneficiaries under the Will of the late Raja P. N. Tagore separately was in accordance with law?

2. If the answer to Question No. 1 be in the affirmative, then whether on the facts and in the circumstances of the case, the assessment of the said Administrator General in the maximum rate was legal?

2. The facts and circumstances referred to are set out in the statement of the case by the Appellate Tribunal and are as follows. One Raja Profulla Nath Tagore died on July 2, 1938, leaving an elaborate Will dated March 14, 1927, by which certain legacies were left to specified persons and institutions, the residue being given to five sons. The residue was disposed of thus by clause 81 of the Will :

"Save and except the legacies that I have provided for in this my present Will and save my garden house at Allambazar Tagore Villa together with articles of furniture I give to my sons all my remaining moveable and immoveable properties that will be left and also the moveable and immoveable properties whereto my right will accrue in future. Subject to the management and payment of these several trusts (Debutter, etc.) and the legacies that I have created or I have directed the, creation thereof in this Will my sons shall continue to hold and enjoy all the said moveable and immoveable properties.

3. Clause 10 of the said Will provided for the payment of the legacies thus:

"The legacies fixed in this my present Will shall have to be paid in full within 15 years of my death and these 15 years my Estate shall be managed under the supervision of my Executors and Trustees. As to the various legacies that I have made a mention of this my Will, my Executors and Trustees shall pay up all the said legacies out of the small savings made from the income of my Estate year after year. For paying up the legacies my Executors and Trustees shall not be competent to sell any portion of my Estate or any immoveable property. As to what I have arranged to pay to the different parties, in this my present Will, my Executors and Trustees shall not pay any interest on those legacies nor shall the legatees be competent to claim any interest."

4. It is not necessary to set out the other clauses of the Will, but we may mention that there were numerous legacies which had to be paid before the residue could be ascertained.

5. Probate of the Will was granted to the said five sons on August 24, 1938, but by an order dated May 10, 1948,the High Court appointed the Administrator General of West Bengal as Administrator and ordered that letters of administration de bonis non of the property and credits of the deceased (Raja Profulla Nath Tagore) with a Copy of the Will annexed thereto be granted and issued out.

6. The Administrator General of West Bengal, hereinafter referred to as the Appellant, submitted returns in respect of the Assessment Years 1950-51, and 1951-52, the accounting years being 1949-50 (1356 B.S.) and 1950-51 (1357 B.S.), showing income of Rs. 36,611 for the first year and Rs. 39,630 for the second year. He claimed that the income was specifically receivable on behalf of the said five sons of the deceased, and their shares in the said income were definite and determinate. The Income-tax Officer-rejected the claim for the Assessment Year 1950-51 on the ground that "the Administrator General of West Bengal is only an executor of the estate of Raja P. N. Tagore and that the execution is not yet complete. Under the circumstances the question of the beneficiaries does not arise and the Administrator General

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1964 Supreme(SC) 250

An Administrator General, appointed de bonis non, is in no way different from an executor vis-à-vis the income he receives from the estate. S. 41 of the Indian Income-tax Act, 1922, applies only when the Administrator General receives income on behalf of a person or persons.

Cases Referred (2)