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Issues:
1. Inclusion of a sum of Rs. 71,279 in the total income of the assessee under the Indian Income-tax Act, 1922. Analysis: The case involved a reference at the instance of the Commissioner under section 66(2) of the Income-tax Act, regarding the inclusion of a specific sum in the total income of the assessee. The assessees were the executors of a deceased individual who was a partner in two solicitors' firms. The dispute pertained to the assessment year 1958-59, with the accounting period from 23rd November, 1957, to 31st March, 1958. The deceased partner had received certain amounts from the firms before his death, and post his demise, the firms allocated specific amounts to his share for different accounting periods. The primary focus was on the amount of Rs. 71,279 allotted for the accounting period in question. The Income-tax Officer initially assessed all amounts received after the partner's death, but the Appellate Assistant Commissioner ruled in favor of the assessees, stating that the sums were not income but remuneration for work done by the deceased. The Appellate Assistant Commissioner held that section 24B did not authorize taxing such income in the hands of the deceased's representatives post his death. The department then appealed to the Tribunal, arguing that the income received after the partner's death was taxable. The Tribunal, however, rejected this argument, citing a previous decision of the Bombay High Court that held such posthumous receipts as capital receipts, not income. The department, dissatisfied with the Tribunal's decision, made a reference to the High Court. The court referred to the Supreme Court's decision in a similar case and a subsequent decision of the Bombay High Court, emphasizing the limited scope of section 24B and the principle of legal fiction. The court also considered a decision of the Patna High Court on a similar matter. Ultimately, the High Court concluded that the issue had already been settled by previous judgments and ruled in favor of the assessee, holding that the sum of Rs. 71,279 was not liable to be included in the total income of the assessee. In summary, the High Court's decision was based on established legal principles and precedents, concluding that the disputed amount was not taxable income but a capital receipt, in line with the interpretation of relevant provisions and previous judicial decisions.
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