1979 (3) TMI 10 - HC - Income Tax

Summary

Issues involved: Assessment proceedings u/s 143(2) of the Income Tax Act, 1961 for assessment years 1961-62, 1962-63, and 1963-64; Addition of one-sixth share of income from HUF property; Challenge of assessment orders before the AAC; Appeal by the ITO against AAC's decision; Interpretation of Section 168 of the Income Tax Act, 1961 regarding taxation of income from the estate of a deceased person.

Summary:

The High Court of Bombay delivered a judgment regarding assessment proceedings under the Income Tax Act, 1961 for the years 1961-62, 1962-63, and 1963-64. The dispute arose when the Income Tax Officer (ITO) sought to add one-sixth share of income from the Hindu Undivided Family (HUF) property of the deceased individual to the assessee's income. The assessee contended that she had not received any part of her share as the heir of the deceased and should not be taxed on that income managed by her mother-in-law. The AAC allowed the appeals, stating that until the estate distribution took place, the income had to be taxed in the hands of the mother-in-law, Bai Pushpavati, as the estate administrator. The ITO appealed against the AAC's decision.

The Tribunal held that the income of the estate should be assessable in the hands of the estate administrator, and since the assessee did not receive any income, she was not liable for tax. The Tribunal upheld the AAC's decision for all assessment years. The High Court, after considering the arguments, found that the assessee was not in possession of any part of the estate and the estate was being administered by Bai Pushpavati. Referring to Section 168 of the Income Tax Act, the Court emphasized that the income of a deceased person's estate must be charged to tax in the hands of the executor or administrator. As the mother was administering the estate, the income could only be taxed in her hands, not the assessee's. Therefore, the income from the estate could not be taxed in the assessee's hands. The Court answered the referred question in favor of the assessee, with no order as to costs.