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TMI Blog1962 (10) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... partners in regard to the realisations of the old outstandings was that in respect of the work done up to the death of Amarchand the realisations were to be divided amongst Amarchand, Mangaldas and Hiralal, in respect of the work between July 8, 1949, and November 30, 1949, the realisations were to be divided between Mangaldas and Hiralal and in respect of work done after December 1, 1949, the realisations were to be divided amongst Mangaldas. Hiralal and Ramesh. The firm kept its accounts on cash basis. For the five assessment years 1950-51 to 1954-55 the following amounts were received : Rs. 37,847, Rs. 43,162, Rs. 34,899, Rs. 13,402 and Rs. 32,523 by the heirs and legal representatives of Amarchand out of the outstandings. The Income-tax Officer sought to tax these realisations. For the assessment years 1950-51 and 1951-52 he assessed the amounts in the hands of the heirs and legal representatives of Amarchand as a Hindu undivided family. Against that order an appeal was taken to Appellate Assistant Commissioner and then to the Appellate Tribunal. The two members of the Tribunal agreed in holding, though for different reasons, that the amounts were not the income of the Hindu un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to pay out of the estate of the deceased, Amarchand, on those amounts to the extent of the estate, as the estate was liable for tax on the amounts received by the heirs and legal representatives just as the deceased, Amarchand, would have been had be not died. The emphasis was on the words in section 24B(1)"or any tax which would have been payable by him under this Act if he had not died". Section 24B is as follows : "24B. Tax of deceased person payable by representative. (1) Where a person dies, his executor, administrator or other legal representative shall be liable to pay out of the estate of the deceased person to the extent to which the estate is capable of meeting the charge the tax assessed as payable by such person, or any tax which would have been payable by him under this Act if he had not died. (2) Where a person dies before the publication of the notice referred to in sub-section (1) of section 22 or before he is served with a notice under sub-section (2) of section 22 or section 34, as the case may be, his executor, administrator or other legal representative shall, on the serving of the notice under sub-section (2) of section 22 or under section 34, as the case m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s but in the "previous' year and which had not been assessed but would have been assessed as income received by him if death had not taken place : see Allen v. Trehearne )[1938] 22 Tax, Cas. 15 where the words "if he had not died" were interpreted. Sub-section (2) provides that if a person dies before the publication of the public notice under section 22(1) or before a notice is served on him under sub-section (2) of section 22 or section 34 then the Incometax Officer may proceed to compute or assess the total income of the deceased person as if the heirs and legal representatives were the assessees. Sub-section (3) provides that when a person dies before a return is furnished by him under the provisions of section 22 or dies after having furnished the return which the Income-tax Officer finds incorrect or incomplete then the Income-tax Officer can make assessment on the total income of the deceased person and certain other consequences follow but in all the cases enumerated above the language used in sub-section (1), (2) and (3) of section 24B contemplates that the heirs and legal representatives of a deceased person are liable to pay income-tax out of his estate (1) where assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is nothing said in that case which supports the contention raised by the Commissioner of Income-tax. Reliance was next placed on certain observations in a judgment of the Bombay High Court in In re B. M. Kamdar[1962] I.T.R. 442,445,(S.C.). Those observations also are of no assistance to the Commissioner of Income-tax. Kania J. (as he then was) there observed that the question whether a particular amount was income or not had nothing to do with the time of its receipt and the question of receipt was material only for the purpose of determining whether on that amount tax was to be levied under the Act in the year of assessment. That was a case where a consulting engineer discontinued his practice as such from February 15, 1938, and he received a sum of money representing the outstanding professional fees earned by him prior to the discontinuance of his practice but realised by him during the calender year which was the previous year. The assessee was keeping his accounts on cash basis and he contended that, as he had discontinued his profession in the previous year, the source had come to an end and the amounts received by him were not liable to income-tax. It was held that the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson and there can be no assessment on a dead person and the assessment is a charge in respect of the income of the previous year and not a charge in respect of the income of the year of assessment as measured by the income of the previous year : Wallace Brothers & Co. Ltd. v. Commissioner of Income-tax [1948] 16 I.T.R. 240,244 (P.C). By section 24B the legal representatives have, by fiction of law, become assessee as provided in that section but that fiction cannot be extended beyond the object for which it was enacted. As was observed by this court in Bengal Immunity Co. Ltd. v. State of Bihar [1955] 2 S.C.R. 603, 646 legal fictions are only for a definite purpose and they are limited to the purpose for which they are created and should not be extended beyond that legitimate field. In the present case the fiction is limited to the cases provided in the three sub-sections of section 24B and cannot be extended further than the liability for the income received in the previous year. In the present case the amounts which are sought to be taxed and which have been held not to be liable to tax are those which were not received in the previous year and are therefore not liable to tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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