1980 (9) TMI 150 - AT - Income Tax

Summary

Issues:
Assessment of income from the estate of a deceased person under section 168 of the IT Act.
Applicability of section 26 of the IT Act in assessing income from property inherited by heirs.

Detailed Analysis:

Issue 1: Assessment of income from the estate of a deceased person under section 168 of the IT Act:
The case involved appeals against assessments made on the basis of income accruing to the estate of a deceased individual. The deceased individual's heirs, including his wife, mother, and daughters, were being assessed for their respective shares of the income. The question was whether the income accruing to the estate should be separately assessed under section 168 of the IT Act. The CIT(A) initially held that the income should be included in the individual assessments of the heirs. However, the AAC later accepted the contention of the assessee that the income should be assessed under section 168. The Tribunal analyzed the provisions of section 168, which provide for the assessment of the income of a deceased person's estate in the hands of the executor. The Tribunal noted that an executor can also include an administrator or any other person administering the estate of a deceased person. Despite the absence of formal authorization, the Tribunal found that the deceased's wife, who was administering the estate, could be considered as the executor for the purpose of section 168. The Tribunal concluded that the income of the estate should be assessed under section 168 in the hands of the wife, rejecting the CIT(A)'s view that the income should be included in the individual assessments of the heirs.

Issue 2: Applicability of section 26 of the IT Act in assessing income from property inherited by heirs:
The departmental representative argued that the income from property inherited by the heirs should be assessed in their individual capacities under section 26 of the IT Act. However, the Tribunal held that since the assessment was to be made under section 168 for the income of the deceased person's estate, there was no scope for applying section 26. The Tribunal explained that under section 168, the assessment is to be made in respect of the income of the entire estate as a single entity, precluding the need for separate assessments based on co-ownership of inherited property. Therefore, the Tribunal dismissed the department's contention regarding the application of section 26 in this context.

In conclusion, the Tribunal allowed the appeal filed by one party while dismissing the appeals by the Department, based on the correct interpretation and application of the provisions of the IT Act regarding the assessment of income from the estate of a deceased person and the inheritance of property by heirs.