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TMI Blog1960 (5) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... the will, and they were directed to pay Meenakshi a sum of ₹ 20,000 within two years of the death of the tester; in default of Meenakshi was to obtain by way of a legacy a property, building in the township of Johore Bahru. The testator bequeathed the residue after payment of his debts, legacies, funeral expenses and testamentary expenses as follows: I give devise and bequeath all the rest and residue of my property and estate of whatever nature and wheresoever situate (hereinafter called the residuary estates) unto my trustees upon the following trust, that is to say (a) My trustees shall immediately after the expiry of three years after my death divide my residuary estate in two equal parts and shall transfer convey, and assign one such equal part to my son Ravana Mana Sona Veerappa Chettiar also known as Sona Visana Rana Veerappa Chettiar for his own absolute use and benefit. I hereby direct that the remaining equal part of my residuary estate shall be thereafter held by my son, Sona Veena Viswanathan Chettiar, in trust for my grandson by the said Sona Veena Vishwanathan Chettiar, for a period of 16 years from my death and that after the said period of 16 years from m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment made by the Income-tax Officer. On further, appeal, the Tribunal negatived the claim of the assessee to be assessed under section 41, as it held that the will of Chocka- lingam being that a member of a Hindu coparcenary with regard to joint family property was invalid, and that Veerappa and Viswanathan were liable to be assessed as a Hindu undivided family. The Tribunal further affirmed the view of the officers of the Department that the income from the two gardens should be included and the payment made to Meenakshi Achi could not be deducted from the assessable income. The following questions were, thereupon, referred for our opinion under section 66(1) of the Indian Income-tax Act: (1) The assessee being a Hindu undivided family, in section 41 of the Income-tax Act applicable to assessment of the income arising from the two gardens in Johore Bahru, aforesaid? (2) Could the payment of ₹ 20,000 to Meenakshi Achi be excluded from the computation of the income of the assessee family of the year of account having regard to the terms of the will? It is obvious that question No. 1 has not been correctly framed. It comprises of two parts, namely, (1) the valid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no question of assessment as a Hindu undivided family could arise. If, on the other hand, the assessment is on the survivors or successors directly, it may be that they hold the property as members of a Hindu undivided family, and be liable to be assessed as such. We shall next consider whether the properties in Johore Bahru could be testamentarily disposed of by Chockalinga., so that the title of the executes could only be under the will. It is conceded that the law of Johore Bahru does not recognise a joint Hindu family as a unit which could own property. Under the law, it would be competent for an acquirer of property to dispose of it as his own property. Therefore, it would be competent for Chockalinga to dispose of his properties by a will. The validity of a disposition of immovable property has to be considered only according to the law of the country (that is, lex loci or lex situs) where the property is situate. Dicey states in his work on the Conflict of laws, 17th Edition, at page 512: Rule 85. All rights over, or in a relation to, an immovable (land) are (subject to the exceptions hereinafter mentioned) governed by the law of the country where the immovable is su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the conclusion of the Tribunal that under the law in Malaya the letters of administration granted would be valid, no question either of the validity of the will or of the rights of the Hindu undivided family over the properties disposed of can at all arise. The learned counsel for the Department relied on the decision of the Privy council in Nataraja Pillai v. Subbaraya Chettiar [1950] 1 M.L.J. 172. In that case, the Hindu widow domiciled in Pondicherry in French India who had properties in British India as well, adopted a son, which adop- tion, according to the French law, could be done without the consent of sapindas. A question arose whether the adopted son would be entitled to the immoveable properties in the British India, which did not recognise an adoption by a widow without the autho- rity of her sapindas. The Privy Council held that the adopted son would be entitled to the properties in British India as well, even though such adoption would have been valid in British India. The question to be decided in that case did not concern itself with the transfer of property in a foreign country. Adoption is a question of status. That had to be decided with reference to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he testator intended an earlier administration. It cannot, therefore, be inferred that the executors necessarily continued, in office till 18th April, 1952. But it has still to be ascertained when the executors ceased to function as such and be- came trustees of the residuary legatees. Under the will, the residue could be ascertained only after payment of the legacy to Meenakshi Achi, the payment of the debts, other legacies, funeral and testamentary expenses. The legacy of Meenakshi Achi was paid during the year of account. There are no materials on record to show whether the administration of the estate had been otherwise complete by then or whether the executors have assented to the vesting of the residue in the residuary legatees. Section 41 of the Indian Income-tax Act would come into play only when the executors have completed their executorial functions and became trustees for the persons beneficially entitled under the will. The will appoints Veerappa and Viswanatha both as executors and trustees. They imply two distinct capacities. In Lord Brougham v. Lord William Poulett [1854] 19 Beav. 119, Sir John Romilly, M.R., dealing with a case where a testator had, by his will, ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Indian Succession Act declare that the title of a legatee is completed only by the assent of the executor. Therefore, till the estate has been administered by payment of the debts of the deceased, the testamentary and funeral expenses and of specific legacies and till there has been an assent to the vesting of the residue, the office of executor would subsist. It is only after completing the administration in the manner stated above that the executor will become a trustee for the beneficiaries in regard to the undistributed properties. In Raghavalu Naidu v. Commissioner of Income-tax [1950] 18 I.T.R. 787, Viswanatha Sastri, J., stated the position thus at page 807: The question in each case is, has the administration reached a point at which you can inter that the administration has been completed, the residuary estate has been ascertained, the bequest of the residue has been assented to and the residuary estate therefore became vested in trustees, be they the executors themselves or strangers? In other words, can it be said that the residuary estate had taken concrete shape and could and should have been handed over by the executors to the persons beneficially entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X
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