1978 (2) TMI 12 - HC - Income Tax

Summary

Issues Involved:
1. Applicability of Section 168 of the Income Tax Act, 1961.
2. Status of the administratrix pendente lite under Section 168.
3. Determination of shares of beneficiaries under Sections 160, 161, and 164 of the Income Tax Act, 1961.
4. Tax assessment of income from the estate during the pendency of probate proceedings.

Detailed Analysis:

1. Applicability of Section 168 of the Income Tax Act, 1961:
The court examined whether Section 168 of the Income Tax Act, 1961, applied to the facts of the case. Section 168 deals with the taxation of the income of the estate of a deceased person in the hands of the executor or administrator. The court noted that no executor was appointed under the will of the deceased, and the administratrix pendente lite was appointed due to the ongoing dispute regarding the will's validity.

2. Status of the Administratrix Pendente Lite Under Section 168:
The court analyzed the role of an administratrix pendente lite, who is appointed under Section 247 of the Indian Succession Act, 1925, during the pendency of a suit touching the validity of the will. The administratrix pendente lite has all the rights and powers of a general administrator, except the right to distribute the estate. The court concluded that an administratrix pendente lite does not qualify as an "administrator" under the Explanation to Section 168 of the Income Tax Act, 1961, because her role is limited to preserving the estate during the litigation and does not involve administering the estate in the same manner as an executor or general administrator.

3. Determination of Shares of Beneficiaries Under Sections 160, 161, and 164 of the Income Tax Act, 1961:
The court considered whether the shares of the beneficiaries were definite and ascertainable under Sections 160, 161, and 164 of the Income Tax Act, 1961. The Income Tax Officer (ITO) had assessed the income of the estate as an "association of persons" under Section 164, arguing that the shares were indeterminate due to the pending litigation. However, the court held that the mere existence of a dispute regarding the will did not make the shares indefinite or unascertainable. The shares of the beneficiaries could be determined based on the will or, if the will was invalid, under the Hindu Succession Act, 1956. The court emphasized that the pendency of litigation did not affect the definiteness or ascertainability of the shares.

4. Tax Assessment of Income from the Estate During the Pendency of Probate Proceedings:
The court addressed the issue of whether the income from the estate should be assessed in the hands of the administratrix pendente lite or allocated among the beneficiaries. The court held that since the administratrix pendente lite was not an "administrator" under Section 168, the income should not be assessed in her hands under that section. Instead, the income should be allocated among the beneficiaries based on their definite and ascertainable shares, as per Section 161 of the Income Tax Act, 1961.

Conclusion:
The court concluded that Section 168 of the Income Tax Act, 1961, did not apply to the administratrix pendente lite, and the shares of the beneficiaries were definite and ascertainable. Therefore, the income from the estate should be allocated among the beneficiaries and not assessed as an "association of persons." The court answered the question of law in favor of the assessee and held that the assessments should be made under Section 161, not under Sections 164 or 168.