9911796707
TMI Blog1989 (8) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... Act on 20-7-1980. This order was set aside by the CIT(Appeals) on 19-10-1980. Another assessment was made u/s. 16(3) of the Wealth-tax Act by the WTO on 18-3-1982 which was again set aside by the CWT(A) by his order dated 6-11-1982. The assessments so set aside for all these years, i.e. for assessment years 1967-68 to 1973-74, were completed by the WTO on 31-3-87. The assessee's legal representative argued before the WTO that the assessments should be made u/s. 21 of the W.T. Act on the Trustees in the like manner and to the same extent as the beneficiaries. The WTO invoked the provisions of sec. 19A(5) and held that the assessments will have to be made on the Executors up to the complete distribution to the beneficiaries of the estate according to their several interests. The WTO held that a vast and valuable piece of land belonging to the estate had remained undistributed and therefore the assessments in respect of the land could only be made under sec. 19A of the Wealth-tax Act and not u/s. 21. Since the Executors of the estate had not completed the distribution of the land, they were liable to be taxed. The WTO rejected the argument of the assessee's representative that the Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bombay High Court in Suit No. 2345 of 1983. He filed copies of Notice of Motion No. 1890 of 83 in the above suit. He referred us to para 14 of the order of the Court in which the arguments of Mr. Mehta, the learned counsel appearing on behalf of the Plaintiffs, were recorded. It was argued there that the administration of the estate of the said deceased Rustomji Dhanjibhai Patel had been completed by the executors-defendants by the year 1960. Since the estate had been completely administered, the executors ceased to be the executors as such and became only trustees of the said land. It was also argued that, even according to the defendants, the administration of the estate of the said deceased had been completed. Reliance was placed by Shri Ganesh on the passage appearing in Paruck's Indian Succession Act, 1925 (6th Edition) at page 722, which was cited by Mr. Mehta before the court and which was reproduced by the Court at the conclusion of para 14 of their order. Particular reference was made to the following observations : "Similarly, an Administrator who has paid all expenses and debts of the intestate and has cleared the estate stands in the same position towards the next-of- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... executors had been admitted in the Notice of Motion as being in possession of the property concerned. He further argued that the estate had not been completely distributed. It was not divided between the beneficiaries on the relevant valuation date and, therefore, the provisions of sec. 19A(5) of the Wealth-tax Act were clearly applicable. Section 19A(5) specifically provided for separate assessment in respect of net wealth on each valuation date as is included in the property from the date of death of the deceased to the date of complete distribution to the beneficiaries of the estate according to their several interests. Shri Viswanathan argued that the "complete distribution to the beneficiaries" in sm. 19A(5) referred to physical distribution of assets and as long as such distribution had not taken place, the value of such land was liable, to be brought to tax in the hands of the executors in terms of the said section 19A(5). Shri Viswanathan relied on a decision of the Tribunal in WTO v. Miss K.P. Sarojini [1987] 21 ITD 518 (Delhi). 7. Shri Ganesh in reply, argued that if sec. 19A(5) provided for assessment in the case of executors, sec. 21 provided for assessment when asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trustee is that an executor is the representative of the testator for all purposes, while a trustee is representative of the legatees or beneficiaries. This is clear from section 211 of the Indian Succession Act, 1921. Stiff, it cannot be said that an executor cannot shed his character as an executor and assume the character of a trustee. In Estate of Late Sri T.P. Ramaswami Pillai's case, the Madras High Court held that there is no invariable rule that an executor cannot shed his character as an executor and assume the character of a trustee under the will, before all the debts are discharged and legatees are paid. He can vest the property in the legatees with mutual consent and hold the legacies as a trustee, even before all the debts are discharged. In that case, the testator created a trust in respect of the entire properties owned by him for various purposes, some of them being for the benefit of his wife and his descendants and most of them being for certain religious and charitable purposes. The testator's son and brother-in-law were appointed as trustees. They filed returns as trustees stating that they had ceased to be executors, and claiming that as the trust was wholly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in fact that position has been reached as regards the principal which has produced the income under discussion in this case." This principle was accepted by the Gujarat High Court in the case of Navnitlal Sakarlal. The High Court held that the fact that the administrator of an estate continues to be liable or the executor continues to be liable for the income-tax liabilities of the estate of the deceased u/s. 168(3) of the Income-tax Act does not mean that the administration is not complete or that the administration had not reached such a point that it could be inferred that the administration had been completed and the residuary estate had been ascertained. This was a decision under the Income-tax Act. A similar view was expressed by the Madras High Court in another decision under the Wealth-tax Act in the case of CWT v. S. Prakasam [1980] 125 ITR 772. The Madras High Court held that there is no invariable rule that an executor cannot shed his character as an executor and assume the character of a trustee under a will before all the debts are discharged and legacies paid. Merely because the debts have not been discharged nor legacies paid, it cannot be stated that the executo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be re-stated. The late Rustomji Dhunjibhoy Patel made his Last Will and Testament on 22-5-1935. He appointed his brother's sons Minocher, Sorabji, Jehangir and Meherwanji and sister's son Phiroze as executors and trustees of his will. He required the executors to pay in full certain debts out of his property which were spelt out in clause (3) of the will. There was no dispute with regard to the fact that the estate had been fully administered by the executors by the year 1960. While disposing of the miscellaneous petition, Justice Mehta of the Bombay High Court in para 25 of his order dated 4-6-1984 made the following observations : "On the question whether the administration had been wound up and consequently the status of the Executors had changed from that of Executors to that of Trustees, I am of the view that prima facie there is sufficient material to show that the administration was complete to the extent that the estate had been realised, the debts, taxes and other liabilities had been defrayed and the legacies had been paid to the beneficiaries from time to time. Only the suit property, it would appear, had not been administered and that was because the property at th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eficiaries who were many in number. That is the reason why there was no physical distribution of the property at Versova. It would appear that the land was agreed to be sold by the Trustees to the Reserve Bank of India @ Rs. 35 per sq. yd. in terms of a letter dated 6-9-74. This property was reserved for public purposes. After the land was offered to be sold to Reserve Bank of India and the agreement for sale was arrived at, the Urban Land Ceiling Act, 1976 came into force with effect from 17-2-1976 and the Reserve Bank of India asked the Trustees to apply the Govt. of Maharashtra and obtained exemption under section 20 of the said Act. The Govt. of Maharashtra rejected the application for exemption made by the Trustees by an order dated 1-11-77. In the meantime, by a notification dated 30-9-74, a part of the land was declared to be reserved for public purposes i.e. for B.E.S.T. Bus Station. However, with the passing of the Urban Land Ceiling Act, land measuring 66,432 sq. metres was declared by the Govt. of Maharashtra as excess vacant land. The Bombay High Court granted an injunction following a writ of certiorari and mandamus passed by the Bombay High Court in Suit No. 1250 foll ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
