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TMI Blog1977 (12) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... en calculated on the basis of the share of profit came to Rs. 6,75,244. Obviously, the computation or ascertainment of this amount could have taken place only after June, 1961. Before the Deputy Controller, the accountable person admitted that this amount constituted part of the estate, but claimed that income-tax on this amount should be allowed as a liability in computing the net estate that would be liable for duty. However, in appeal before the Appellate Controller of Estate Duty, it was contended that the Deputy Controller had erred in including the said amount in the principal value of the estate, inasmuch as the said amount representing share of profits was determinable at the end of the accounting year of the said company, i.e., on or after 30th June, 1961, i.e., much after the death of the deceased and as such it was not due to the deceased on the date of his death. It was accordingly contended that it accrued to the estate of the deceased and was a capital receipt of the estate from the said company. An alternative plea to the effect that even if the said amount is includible, income-tax due thereon should be allowed had been raised before the Deputy Controller. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve passed on the death of the deceased, Mr. Kolah principally relied on the decision of the Supreme Court in E. D. Sassoon Company Ltd. v. CIT [1954] 26 ITR 27. It may be stated that reliance was also placed on an unreported judgment in CEPT v. P. N. Mehta Sons (Income-tax Reference No. 19 of 1950, decided on 10th October, 1950), but since the Bombay decision is referred to in the Supreme Court decision, we will refer to that decision a little later on. The matter before the Supreme Court in E. D. Sassoon's case [1954] 26 ITR 27 arose by reason of assignment of a managing agency of S Company to A, which took place on 1st December, 1943. Under the managing agency agreement, the S company was entitled to receive as their remuneration, subject to a minimum, a commission of certain per cent. per annum on the annual net profits of the U company which was due to them on the 31st March every year. The accounts of this commission payable to the managing agents for the calendar year 1943 were made up in 1944 and paid to A in 1944. The question was whether in the assessment year 1944-45, A was liable to pay tax on the accrual basis on the whole of the commission or whether the tax was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is whether the deceased had the right to receive a share of the profit only if he served the company for the full year and whether it could be said that he lost such right if he could not serve the company for the full year but only a part thereof by reason of his death before the completion of the year. If he served the company for the full period for which he could render service to anyone on this earth, then it would not be right to say that he did not have in law the right to receive the share of profit although the actual computation of profit or the apportionment of the amount payable would be certainly at a point of time subsequent to his death. The unreported Bombay case referred to in E. D. Sassoon's case [1954] 26 ITR 27 in the Supreme Court decision has no bearing either way on the matter before us as the question considered was limited only to the accountable year in which the income was to be taken. On the facts of that case, the decision of the Tribunal as to the accountable year was upheld by the High Court. Mr. Kolah sought to argue on the basis of this decision and observations in similar decisions that these cases would suggest that on the date in question, i.e., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our view, the decision turned on the same peculiar facts of that case and would have little relevance for our purpose. In order to consider whether the amount mentioned in the question referred to us is includible in the estate of the deceased, it will have to be seen whether the amount can be considered to be in anywise the property of the deceased. For these purposes counsel on behalf of the revenue contended that decisions given under the Income-tax Act were of little assistance for determining the true position under the E.D. Act and the position would be required to be determined in accordance with the specific statutory provisions under the E.D. Act. In this connection, he drew our attention to the definitions of "property" and "property passing on death" occurring in ss. 2(15) and 2(16) of the E.D. Act, 1953, and the further provisions to be found in ss. 3, 5 and 6. These provisions have been considered by the Delhi High Court in two decisions to which reference may now be made. The first of these is CED v. A. T. Sahani [1970] 78 ITR 508 (Delhi). In the report aforesaid the statutory provisions are fully set out and it is observed: "In order, therefore, to enable the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty of the deceased on the date of his death and what was paid to his estate after June, 1961, could not be regarded as part of the property of the deceased or as part of the property of the deceased passing on his death. As indicated by us earlier, we are not able to subscribe to his submission that on the date of death the deceased could not be said to have a legal right to claim the share in profits. The approach of the Supreme Court in E. D. Sassoon's case [1954] 26 ITR 27 about the entitlement of the managing agency commission could have no application to the facts before us. There is no real distinction between the monthly payment of Rs. 150 and the payment in the share of profits. They must be taken to accrue to the deceased from month to month; however, the amount of profits accrued to him becomes due and payable to him only after June when the accountable year of the company would come to an end and when the profits, if any, can be ascertained. To accept Mr. Kolah's submission would amount to a mixing up of computation or ascertainment of the amount due to the deceased with accrual of the same. As put by Mr. Joshi the proper approach would be to consider whether th ..... 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