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TMI Blog2000 (10) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. He died on September 1, 1990. He has been assessed to income-tax up to the assessment year 1991-92. During the financial year 1994-95, the assessment of Sri P. V. Swamy for the assessment years 1982-83 up to 1987-88 and 1989-90 were revised and a sum of Rs. 21,52,500 was refunded to the legal heirs under section 244 of the Act. The refunded amount included an amount of Rs. 8,34,479 being the interest calculated on the actual refund amount under section 244(1A) based on revised assessment. The petitioners in these two original petitions are the legal heirs of the aforesaid P. V. Swamy. For the assessment year 1995-96 one-third of the interest amount of Rs. 8,34,479 was included as the income of the petitioners in their return. Thus, Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Company. When the assessment regarding the Kerala Transport Company was revised as per the appellate order, a revision became necessary regarding the assessment of Sri P. V. Swamy for the assessment years 1982-83 up to 1987-88 and 1989-90. The date of the refund order ranges from October 31, 1994, to March 27, 1995. So it was received in the accounting year 1994-95. There are three heirs for Sri P. V. Swamy. The entire refund amount included an interest of Rs. 8,34,479. The question raised is whether the amount of Rs. 8,34,479 which was received as interest should be treated as income of the deceased P. V. Swamy, so that it will be received as capital by the legal representatives and will not be included as assessable income. The refund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t or recomputation under section 147), any proceeding taken against the deceased before his death shall be deemed to have been taken against the legal representative from the stage at which it stood on the date of the death of the deceased : any proceeding which could have been taken against the deceased if he had survived, may be taken against the legal representative and all the provisions of this Act shall apply accordingly. Sub-section (3) states that for the purposes of this Act, the legal representative of the deceased shall be deemed to be an assessee. Section 168 of the Act states that, the income of the estate of a deceased person shall be chargeable to tax in the hands of the executor. The question before us is whether the inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that previous year became assessable to income-tax in the relevant assessment year. The section was enacted by the Legislature to bring to tax, after his death, income received during his lifetime, and fill up the lacuna which was pointed out in Ellis C. Reid v. CIT [1930] 5 ITC 100. Any income received in the year subsequent to the previous or the accounting year could not be called income received by the deceased person. The provisions of section 24B did not extend to tax liability of the estate of a deceased person beyond the previous or the account year in which that person died." In that case the Supreme Court further held that the amounts received by the legal representatives of a person could not be taxed in their hands as they co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n hand. Learned counsel for the petitioner also relied on the decision of the Supreme Court in Kapil Mohan v. CIT [1999] 235 ITR 278. The facts of that case were as follows : One N. Mohan had deposited the sum of Rs. 1,57,250 under the Annuity Deposit Scheme framed under Chapter XXII-A of the Income-tax Act, 1961. The same was refundable to him in ten equal instalments of principal and interest under the provisions of section 280D of the Act. The said Mohan died on July 15, 1969. The instalment of principal and interest in the sum of Rs. 12,013 payable to him under section 280D was paid to the assessee, his son and executor. For the assessment year 1970-71, the Income-tax Officer treated the sum of Rs. 12,013 as income in the hands of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to say, the annuity was to be treated as income if received by the original depositor. On the original depositor's death, the balance of the annuity deposit that he had made became part of his estate ... " It is also pertinent to point out that, the Supreme Court also relied on the scheme which stated that unpaid balance of the annuity deposit has to be paid over to the original depositor's legal representative and that it would be paid in instalments as annuity. Though so paid in annuity form, the repayment is of capital. The above decision can be distinguished because, the observations have been made on the basis of the facts of those cases. As already stated, in this case, it cannot be said that the interest on the refund accrued a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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