1962 (8) TMI 118 - HC - Income Tax

Summary

Issues Involved:
1. Applicability of Section 24 of the Mysore Agricultural Income-tax Act, 1957.
2. Separate assessment of beneficiaries.
3. Divisibility of residuary income.
4. Applicability of Section 10 of the Mysore Agricultural Income-tax Act, 1957.
5. Assessment on behalf of beneficiaries.

Detailed Analysis:

1. Applicability of Section 24 of the Mysore Agricultural Income-tax Act, 1957:
The court examined whether Section 24 of the Act applied to the case, which concerns the liability of an executor to pay agricultural income-tax from the estate of a deceased person. The court concluded that Section 24, which corresponds to Section 24B of the Indian Income-tax Act, 1922, only deals with income accrued to or received by a deceased person before their death. Since Mr. White died on January 31, 1955, and the assessment year in question is 1958-59, Section 24 was deemed inapplicable. The department conceded this point.

2. Separate Assessment of Beneficiaries:
The court considered whether the beneficiaries could be assessed separately or if the income received by the executors and trustees was indivisible. The court noted that the will did not make separate bequests to each of the six children but instead divided the residuary estate into two equal shares for two sets of beneficiaries. Therefore, the court concluded that the income was not divisible among the six beneficiaries but should be assessed on behalf of the two sets of beneficiaries.

3. Divisibility of Residuary Income:
The court analyzed whether the residuary income from the estates was divisible into six or two equal shares. The will specified that the residuary income should be divided into two equal shares: one for Arthur St. John White, Miss Carmel White, and Dorothy Daphna White, and the other for Edward White, Oswald White, and Blossom White. The court concluded that the residuary income was to be divided into two equal shares, not six.

4. Applicability of Section 10 of the Mysore Agricultural Income-tax Act, 1957:
The court examined whether Section 10 of the Act was applicable and whether the tax should be levied upon and recovered from the executors and trustees. Section 10(1)(a) states that the tax should be levied in the same manner and to the same extent as it would be from the beneficiaries. The court found that Section 10 was applicable since the executors were receiving income on behalf of the beneficiaries and had no personal interest in the income. The liability of the executors should be co-extensive with that of the beneficiaries.

5. Assessment on Behalf of Beneficiaries:
The court addressed whether the assessments should be made separately on behalf of each of the six beneficiaries or the two sets of beneficiaries. The will indicated that the residuary estate was to be divided into two equal shares for two sets of beneficiaries. Therefore, the court concluded that the executors should be assessed on behalf of the two sets of beneficiaries, not individually for each of the six beneficiaries.

Conclusion:
The court concluded that Section 24 of the Act was inapplicable, and Section 10 was the relevant section for assessment. The executors should be assessed on behalf of the two sets of beneficiaries mentioned in the will. The parties were ordered to bear their own costs.