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Commissioner of Wealth-tax, Bombay City-ii Vs. Keshub Mahindra - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberWealth-tax Reference No. 11 of 1970
Judge
Reported in[1983]139ITR22(Bom); [1981]5TAXMAN323(Bom)
ActsIncome Tax Act, 1961 - Sections 168; Wealth Tax Act, 1957 - Sections 2, 2(e), 2(q), 2(m), 3, 14, 14(1), 14(2), 15, 16, 17, 19, 19(1), 19(2), 19A, 21 and 27(1)
AppellantCommissioner of Wealth-tax, Bombay City-ii
RespondentKeshub Mahindra
Excerpt:
- - movable or immovable, it is clearly that everything of value which an assessee possesses is brought into the ambit of the charging section and is assumed to have some value, however little. 18. as already pointed out, the assessee has inherited certain assets from his father, being the only son of the father, it is well-known that inheritance is never in abeyance, and inheritance has taken effect in the instant case the moment the father died, with the result that the property immediately devolved on the assessee as the sole heir of his father. 23. the three decisions referred to above, in our view, have clearly established that it is sufficient for the purposes of s. the decision of tax-wealth the high court clearly mentions :there is no dispute between the parties as regards that.....chandurkar, j.1. this reference in which three questions have been referred at the instance of the revenue and one question has been referred at the instance of the assessee arises out of the proceedings for assessment to wealth-tax for the assessment years 1964-65 and 1965-66.2. the father of the assessee died on october 31, 1964. the assessee, while submitting the return for the assessment year 1964-65 stated that he had filed a separate return of the net wealth of his father, late k. c. mahindra, because, according to the assessee, the estate was still to be administered and the final position could be ascertained only after completion of administration of his estate. the wto declined to separately assess the estate of the deceased father, holding that the assessee, being the sole heir.....
Judgment:

Chandurkar, J.

1. This reference in which three questions have been referred at the instance of the Revenue and one question has been referred at the instance of the assessee arises out of the proceedings for assessment to wealth-tax for the assessment years 1964-65 and 1965-66.

2. The father of the assessee died on October 31, 1964. The assessee, while submitting the return for the assessment year 1964-65 stated that he had filed a separate return of the net wealth of his father, late K. C. Mahindra, because, according to the assessee, the estate was still to be administered and the final position could be ascertained only after completion of administration of his estate. The WTO declined to separately assess the estate of the deceased father, holding that the assessee, being the sole heir and the father having died intestate, took the entire estate with all the liabilities and since the assessee had become the sole owner of the estate, he should have declared all the liabilities and since the assessee had become the sole owner of the estate, he should have declared all the assets left by the father as his wealth. Consequently, he included 'the wealth of the estate as the wealth or the assessee' in his personal assessment. In respect of the assessment year 1965-66, for which the valuation date was March 31, 1965, also the assessee did not include in his wealth what according to him was the un administered estate of the deceased father on March 31, 1966. The WTO, however, had declined to make any separate assessment in respect of what was described by the assessee as 'unadministered assets of late Shri K. C. Mahindra'.

3. The AAC of Wealth-tax, in the appeal filed by the assessee, in which it was contended on his behalf that the father's estate was under administration on the relevant valuation date and. Therefore, it could not be included in the net wealth of the assessee, took the view that the provision of s. 19A of the W.T. Act, 1956 (hereinafter referred to as 'the Act'), were not applicable, and he maintained the order of the WTO by which the wealth left by the father was included in the net wealth of the assessee for both the years.

4. In the two appeals filed before the I.T. Appellate Tribunal, the contention that the estate of the deceased father of the assessee was under administration and, therefore, it should have been separately assessed was repeated. The Appellate Tribunal, no doubt, took the view that the assets left behind by the deceased (father) were the self-acquired property of the assessee's father and that it was wrong to suggest that the estate had to be administered before the ownership vested in the assessee, but it took the view that in the first year, that is, the assessment year 1964-65, the assessee was not liable to be assessed on the value of the assets because. According to the Tribunal, s. 19A was inserted in the Act from April 1, 1965, and was not, therefore, applicable to the assessment year 1964-65 which is the first year involved in the appeal. The Tribunals further took the view that although the assessee himself was the owner of the estate and could have been so assessed, there was an alternative mode of assessment under s. 19 of the Act, and, therefore, the Tribunal found that method of assessment being more favourable to the assessee for the assessment year 1964-65. The assets left by the father should be assessed in the net wealth of the assessee. Thus, the net wealth represented by the assets inherited from the father were deleted from the assessment for the assessment year 1964-65. With regard to the assessment year 1965-66, the Tribunal took the view that as the assessee was the full owner of the assets on the valuation date, the assets of the father were liable to be assessed as net wealth in the hands of the assessee. The Tribunal also took the view that the taxes ultimately assessed in respect of the income and net wealth of the father were liable to be deducted, and it, therefore, directed that these taxes should be allowed as deduction as claimed and not on the basis of the returns filed.

5. On these facts, the following questions have been referred under s. 27(1) of the Act, at the instance of the Revenue :

Assessment year 1964-65 :

'1. Whether, in computing the net wealth of the assessee, the liabilities for direct taxes in respect of assessment pending on the valuation date should be deducted according to the respective returns submitted by the assessee, or the taxes ultimately found payable are to be deducted ?

2. Whether, in computing the net wealth of the assessee, the value of the assets left by the assessee's father is to be included ?'

Assessment year 1966-66 :

'3. Whether, in computing the net wealth of the assessee, the liabilities for direct taxes in respect of pending assessments of the assessee and the assessee's father on the valuation date should be deducted according to the respective returns submitted or the taxes ultimately found payable are to be deducted ?' Assessment year 1965-66- At the instance of the assessee : '4. Whether, in computing the net wealth of the assessee, the value of the assets inherited from the assessee's father is liable to be included ?'

6. On a reading of the questions reproduced above, it is apparent that questions Nos. 1 and 3 are identical, but have been separately referred because of the two different assessment years in which they arose. Questions Nos. 2 and 4 are also identical and question No. 4 has come to be referred at the instance of the assessee, because the Tribunal accepted the contention of the department for the assessment year 1965-66, that the assets inherited by the assessee should be treated as a part of his net wealth. We shall take up questions Nos. 2 and 4 initially because those are the two questions which have been very elaborately argued both on behalf of the Department and on behalf of the assessee.

7. Shri Joshi, the learned counsel appearing for the Revenue, contended that the assessee is the sole heir of his deceased father and, therefore, he inherited the entire property of his deceased father and as a result of such inheritance he becomes the owner of all the property which is left behind by his father. The learned counsel contends that inheritance is never in absence and once inheritance has occurred and the property has vested in the assessee, the only basis on which the property left behind by the father can be assessed is that the property or assets now belong to the assessee and they must necessarily be assessed as the net wealth of the assessee. Shri Joshi has vehemently contended that neither the provisions of s. 19 nor s. 19A of the Act are relevant for the purposes of assessment. In the instant case, because the father of the assessee died on October 31, 1963. The next valuation date admittedly for the assessment year 1964-65 was March 31, 1965, and for the assessment year 1965-66, the valuation date was March 31, 1965. Shri Joshi has contended that on the relevant valuation date, March 31, 1964, the wealth which originally belonged to the father of the assessee absolutely belonged to him and there was no change in respect of the ownership of this wealth on March 31, 1965. Therefore, according to the learned counsel, on the admitted fact that the assessee was the sole owner March 31, 1964, and March 31, 1965, the property left behind by the father could be assessed only in his hands under the substantive provisions of s. 3 of the Act. There was, therefore, no occasion, according to the learned counsel, to invoke either the provisions of s. 19 or s. 19A of the Act.

8. Shri Dastur, appearing on behalf of the assessee, has contended that the estate left behind by the father was liable to be separately assessed as 'estate of the deceased'. According to the learned counsel, though it is true that the deceased father had died intestate and he had not left any will and, therefore, the assessee cannot claim to be an executor or an administrator because he has not obtained any letters of administration, he was still a person who was administering the estate of a deceased person, as contemplated by the Explanation to s. 19A of the Act. The learned counsel. Therefore, contended, relying on the decision of this court in Jamnadas v. CWT : [1965]56ITR648(Bom) , that the assessment for the year 1964-65, in respect of the net wealth left behind by the father, should be made against him as a legal representative of the father and the assessment for the next assessment year 1965-66 should be made in respect of the estate of the deceased having regard to the Explanation to s. 19A. Therefore, according to the learned counsel, for none of these two years. The assets left behind by the father, should be made against him as a legal representative of the father and the assessment for the next assessment year 1965-66 should be made in respect of the estate of the deceased having regard to the Explanation to s. 19A. Therefore, according to the learned counsel, for none of these two years, the assets left behind by the father could be included as a part of the assessee's own net wealth. Indeed, according to the learned counsel, the same mode of assessment will have to continue until the administration of the estate of the deceased father is completed. We have been told that as a person administering the estate of his deceased father, the assessee has to perform certain functions such as recovering certain debts, payment of certain debts, filing of an estate duty return, payment of estate duty determined in respect of the estate of the deceased; these are all acts which, according to the learned counsel, are akin to the acts performed by either an executor or an administrator. Shri Dastur was not in a position to dispute that under the Hindu law, the assessee had inherited the entire property left by the deceased father. That also is the finding recorded by the Tribunal which had to be accepted for the purposes of this reference. The two crucial questions which, therefore, will have to be determined before an answer to the controversy raised in this reference is given are : Whether the provisions of ss. 19 and 19A are at all attracted in the instant case or whether the assessee was liable to be assessed to wealth-tax as the sole heir, in whom the assets of his deceased father have vested with full ownership rights immediately after his death.

9. In order to correctly appreciate the scope and the purpose of ss. 19 and 19A, it is necessary first to refer to certain basic concepts which are to be found in the Act and with reference to which the liability pay wealth-tax has to be determined. The charging provision in the Act is s. 3. Which provides as follows :

'3. Subject to other provisions contained in this Act, there shall be charged for every assessment year commencing on and from the first day of April, 1957, a tax (hereinafter referred to as wealth-tax) in respect of the net wealth on the corresponding valuation date of every individual, Hindu undivided family and company at the rate or rates specified in Schedule I.'

10. Section 3 provides for a charge of tax in respect of the net wealth on the corresponding valuation date of every individual, HUF and company at the rate or rates specified in Sch. I. The charge created by s. 3 is on the net wealth of an assessable entity which must fall under any one of the three categories, namely, individual, HUF and company. We are not immediately concerned with the latter two. But it is clear that s. 3 refers to the net wealth of an individual and this individual must necessarily be has to be ascertained is made clear by the use of the words 'on the corresponding valuation date'. Therefore, the net wealth of the individual has to be ascertained as belonging to him on the corresponding valuation date. The valuation date is defined in s. 2(q) as meaning the last day of the previous year as defined in s. 3 of the I.T. Act, 1961, in relation to any year for which an assessment is to be made under the Act. There is no dispute that the two valuation dates. In the instant case, are March 31, 1964, and March 31, 1965. Before we go to the definition of 'net wealth', we may refer to the provisions of s. 14 of the Act which deals with the procedure relating to assessment. Section 14(1) provides that every person, if his net wealth or the net wealth of any other person in respect of which he is assessable under the Act on the valuation date was of such amount as to render him liable to wealth-tax under the Act, shall, before the 30th day of June of the corresponding assessment year, furnish to the WTO a return in the prescribed form and verified in the prescribed manner setting forth the net wealth as on that valuation date. The proviso to s. 14(1) is not relevant for our purpose. Section 14(1), therefore, provides that if a person has his net wealth on the valuation date. Reading ss. 3 and 14 together, it is clear that these substantive provisions contemplate that an individual who has net wealth, which is assessable under the Act with reference to the valuation date. Must file a return. Both ss. 3 and 14 contemplate that the person whose net wealth is being assessed or who is liable to wealth-tax is a person who is alive on the valuation date and that on the valuation date he possesses net wealth which can be assessed to wealth-tax. What happens if a person is alive on the valuation date but does not file a return if he is otherwise liable to assessment to wealth-tax is a matter which we shall consider later. We have referred to ss. 3 and 14(1) for the present to indicate that both these provisions contemplate a person who is living on the valuation date and who is required to file a return. In other words, the liability created by ss. 3 and 14 is in respect of the net wealth belonging to an individual who is living on the valuation date.

11. It is then necessary to refer to two other definitions in the Act. The first definition is of 'net wealth' in s. 2(m). The relevant part of the definition reads as follows :

'Net wealth' means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date other than - .....'

12. The definition of 'net wealth' reproduced above shows that under the law it consists of the aggregate value computed in accordance with the provisions of the Act of all assets wherever located and those assets must belong to the assessee on the valuation date. Here again, the assets which can be included as a part of the net wealth must belong to the assessee on the valuation date. We are not immediately concerned with the latter part of the definition which provides for deducting the value of all debts owed by the assessee on the valuation date except for the limited purpose of showing that the debts which have to be taken into account for the purposes of determination of net wealth are the debts which are owed on the valuation date. Two things are important in the definition of 'net wealth'. They are that the assets wherever located are to be ascertained and valued in the manner prescribed by the Act and those assets must belong to the assessee on the valuation date.

13. The words 'belonging to the assessee' used in the definition of 'net wealth' have been construed by the Supreme Court in CWT v. Bishwanath Chatterjee : [1976]103ITR536(SC) . Referring to the meaning of the word 'belong' in the Oxford English Dictionary, which was given as 'to be the property or rightful possession of', the Supreme Court has pointed out that the liability to wealth-tax arises out of ownership of an asset and mere possession unaccompanied by the right to, or ownership of, property would not bring the property within the definition of 'net wealth'. The relevant observations of the Supreme Court are as follows (p. 539) :

'So It is the property of a person, or that which is in his possession as of right, which is liable to wealth-tax. In other words, the liability to wealth-tax arises out of ownership of the asset, and not otherwise. Mere possession, or joint possession, unaccompanied by the right to, or ownership of, property would, therefore. Not bring the property within the definition of 'net wealth' for it would not then be an asset 'belonging' to the assessee.'

14. Apart from the definition of 'net wealth', it is now clear from the decision of the Supreme Court that the ownership of an asset is necessary for its inclusion as a part of the net wealth of an assessee.

15. The definition of 'net wealth' refers to the assets, and 'assets' has been defined in the Act in s. 2(e) as including property of every description, movable or immovable. Properties which are not included in the assets and which are specified in the definition are not relevant for our present purpose. The word 'assets' is thus used in the widest possible term, and it can hardly be disputed in the instant case that the property left behind by the father of the assessee, which consists mainly of shares and right to recover debts, falls within the definition of 'assets'. We may point out that this definition was exhaustively considered by this court in CWT v. Purshottam N. Amersey : [1969]71ITR180(Bom) , in which the Division Bench has pointed out that it was clear on the wording of s. 3 of the Act that the moment the right, interest or other property falls within the definition of assets, the Act assumes that it must have some value and that since net wealth includes all assets, wherever located, belonging to the assessee, and since assets include property of every description. Movable or immovable, it is clearly that everything of value which an assessee possesses is brought into the ambit of the charging section and is assumed to have some value, however little.

16. Therefore, reading the definitions of 'net wealth' and of 'assets', and the charging provision in s. 3, it is difficult to dispute that property of every description, movable or immovable, if it belongs to the assessee on the valuation date, will form a part of the net wealth of the assessee.

17. The contention which is raised on behalf of the revenue and the assessee will, therefore, have to be considered in the light of the definition ins, 2(m) and the charging provision in s. 3, unless it is possible to hold that there is some other provision in the Act which could be invoked by the assessee in support of his contention that in respect of the wealth left behind by his father, he cannot be assessed and that that wealth cannot be treated as a part of his net wealth.

18. As already pointed out, the assessee has inherited certain assets from his father, being the only son of the father, it is well-known that inheritance is never in abeyance, and inheritance has taken effect in the instant case the moment the father died, with the result that the property immediately devolved on the assessee as the sole heir of his father. If the property has devolved on the assessee as the sole heir by the law of inheritance, it is difficult to see how one can resist the conclusion that the property which is now sought to be treated separately for the purposes of assessment to wealth-tax does not belong to the assessee.

19. In order to show that the property belongs to an assessee when he succeeds by inheritance, Shri Joshi has referred to certain decisions which deal with the effect of the death of a Hindu who is governed by the Dayabhaga law, and the question was whether in such a case the assessment to wealth-tax could be made as an HUF or whether the heirs were liable to be assessed separately to wealth-tax. In CWT v. Gouri Shankar Bhar : [1968]68ITR345(Cal) , a Hindu father, governed by the Dayabhaga law, died intestate on April 27, 1956, leaving behind his mother, a widow, three sons and one daughter. The death having occurred before the coming sons and one daughter. The death having occurred before the coming into force of the Hindu Succession Act, 1956, the daughter was not one of the heirs, and the only four heirs who were entitled to inherit the property were his widow and three sons. One of the sons took out letter of administration and filed a wealth-tax return in his capacity as administrator of the estate of the deceased and the status of the assessee was described as an HUF. The WTO made an assessment treating the HUF as the assessee, but that order was challenged by the son who had taken out letters of administration and the argument was that the family begin governed by the Dayabhaga school of law and the shares of the coparceners in the properties left by the deceased being definite and ascertained. The assessment should not have been made in the status of an HUF and each member of the family should have been assessed separately on the value of his or her respective share in the inherited property. The AAC overruled this contention, but the Appellate Tribunal took the view that since wealth-tax was levied on the basis of ownership the assessments should be made on the individual coparceners on their respective shares, and the Tribunal cancelled the assessment. The correctness of this view of the Tribunal cancelled the assessment. The correctness of this view of the Tribunal was put in issue in the question referred to the Calcutta High Court. The Calcutta High Court took the view that on the death of a Hindu governed by the Dayabhaga school of Hindu law, his heirs do not, by operation of law, become members of a Hindu joint family and they remain as owners with definite and ascertained shares in the properties left by the deceased, unless they voluntarily decide to live as a joint family. The High Court, therefore, held that the heirs could not be assessed to wealth-tax, as an HUF on the entire net wealth left by the deceased but each of the heirs must be separately assessed to wealth-tax on his share as an individual, unless there was evidence to show that the heirs had voluntarily decided to constitute themselves into a Hindu joint family. The High Court further held that, at any rate, when the estate of the deceased is held by an administrator appointed by the court, wealth-tax should be separately assessed in respect of the share of each of the heirs under s. 21 of the Act inasmuch as under the Dayabhaga law the shares of the heirs are defined and ascertained.

20. Shri Joshi has also referred to the decision of the Supreme Court in appeal against the decision of the Calcutta High Court, which is reported as CWT v. Gauri Shankar Bhar : [1972]84ITR699(SC) . The Supreme Court confirmed the view of the Calcutta High Court that in that case each heir took a definite share in the property and was liable to pay wealth-tax as individual on the share that devolved on him.

21. Shri Joshi has also relied on certain observations of the Supreme Court in Bishwanath Chatterjee's case : [1976]103ITR536(SC) , which also dealt with a case where property devolved on the heirs of an individual who was governed by the Dayabhaga law dying intestate, and the Supreme Court held that each coparcener took a defined share in the property and was the owner of his share and each such share thus belonged to the coparcener and that it was his net wealth within the meaning of s. 2(m) and was liable to wealth-tax as such under s. 3.

22. These three decisions were relied upon by Shri Joshi to contend that even in a case where the heirs took the property in definite and ascertained shares, such shares have been treated as the net wealth of the assessee, and, according to the learned counsel, the present case stood on a much stronger footing inasmuch as the assessee was the sole owner of the assets which devolved on him, by virtue of inheritance, and, therefore, according to the learned counsel, the assets, which were sought to be treated as the separate estate of the deceased by the assessee for the purposes of assessment to wealth-tax, must be treated as having belonged to the assessee.

23. The three decisions referred to above, in our view, have clearly established that it is sufficient for the purposes of s. 2(m) if there is an ascertained and definite share in property inherited by the assessee, and in such a case the share belongs to the assessee as contemplated by s. 2(m) of the Act. We need not really take recourse to these decisions, because on general principles of Hindu law it is impossible to reach a contrary finding in so far as the property left behind by the assessee's father is concerned. It is nobody's case that the property does not belong to the assessee. As a result of inheritance, the assessee has become the owner of the property. If he is the owner of the property and the property belongs to him, then, as already pointed out, unless there is some other provision which can take the assessee's case out of the substantive provisions of s. 3, the part of his net wealth.

24. It is in this context that Shri Dastur has heavily relied on the decision in Jamnadas' case : [1965]56ITR648(Bom) and the provisions of s. 19A. It is, therefore, necessary to first refer to the decision in Jamnadas' case : [1965]56ITR648(Bom) . The original owner of the property, one Sodradevi, died on October 5, 1959, leaving a will dated April 8, 1959, appointing two joint executors. The financial year in that case ended on October 31, 1959. Sodradevi had thus died before the end of the financial year. The relevant assessment year was 1960-61. For the in respect of the estate left by the deceased. The decision of tax-wealth the High court clearly mentions : 'There is no dispute between the parties as regards that assessment.' Therefore, in Jamnadas' case : [1965]56ITR648(Bom) , the assessment for the assessment year, corresponding to the financial year in which Sodradevi had died, was not in dispute. We may at this stage once again mention that Shri Dastur has argued that just as in Jamnadas' case : [1965]56ITR648(Bom) for the assessment year corresponding to the financial year in which the assessee had died in that case, the executors were assessed to wealth-tax, in the instant case also, for the assessment year 1964-65, which corresponds to the financial year in which the father of the assessee died, the assessee had died, in that case, the executors were assessed to wealth-tax, in the instant case also, for the assessment year 1964-65, which corresponds to the financial year in which the father of the assessee died, the assessee should be assessed as a person administering the estate. Now, what happened in Jamnadas' case : [1965]56ITR648(Bom) was that the real controversy was with regard to the assessment for the assessment year 1961-62, corresponding to the financial year ending on October 31, 1960. The WTO served a notice on the executors on August 8, 1961, under the provisions of s. 14(2) requiring of them that a return should be filed in connection with the wealth-tax payable by the estate of the deceased. The executors also filed a return. And the WTO determined the net value of the wealth of the deceased. In the order the name of the assessee was mentioned as 'Estate of Smt. Sodradevi Daga, through joint executors, Nagpur' When wealth-tax was demanded from the executors by a demand notice, they challenged the demand by a revision petition before the Commissioner, contending that the assessee was not living Appeal from the Judgment and Order dated on October 5, 1959, and there could be no assessment on a deceased individual. The contention was that the tax was levied on wealth that did not belong to the deceased after her death and/or at the valuation date mentioned in the assessment order. The Commissioner declined to interfere with the order of the WTO. That order of the Commissioner was challenged in a writ petition before the High Court, the question which was posed by the Bench for consideration was : 'Whether there is a provision in the Wealth-tax Act for taxing a deceased person in respect of the net value of the wealth left by such person ?' The question was further elaborated by observing (p. 649 of 56 ITR) :

'In other words, the question is whether under the charging section 3 and other provisions of the Act, it was permissible for the revenue to issue the demand notice against the executors to file a return in respect of the wealth-tax to be charged on the estate of the deceased for the financial year expiring on October 31, 1960, or the assessment year 1961-62.'

25. It will be, therefore, clear that the question which fell for decision before the Division Bench was in respect of a financial year in which the assessee was admittedly not alive on the valuation date and the estate of the deceased was sought to be taxed, and the question was whether such an assessment was permissible. It was with reference to that contention that the Division Bench took the view that there is no provision in the Act for charging and assessing wealth-tax in respect of the net wealth of a deceased individual beyond the financial year in which such person dies and his executors. Administrators and legal representatives are, by legal fiction, made liable to pay wealth-tax for the particular year in the next assessment year. The Division Bench also held that there is no further liability to pay wealth-tax attached to the estate left by a deceased individual and continuing in the hands of the executors, administrators or other legal representatives.

26. Now, so far as the present case is concerned, Shri Dastur has not relied on Jamnadas' case : [1965]56ITR648(Bom) (Bom) for the assessment year 1965-66. And indeed very rightly so, because for the assessment year 1965-66, s. 19A was already on the statute book. In so far as the decision in Jamnadas' case : [1965]56ITR648(Bom) is concerned, it may be pointed out that there was no provision analogous to s. 19A in the relevant assessment year 1962-62. It is very clearly stated before us that Jamnadas' case : [1965]56ITR648(Bom) was relied upon for the limited purpose of contending that for the assessment year 1964-65, the assessment should be made. In the instant case, against the assessee as a legal representative or as a person administering the estate, just as in Jamnadas' case : [1965]56ITR648(Bom) , the assessment for the assessment year 1960-61 was made on the executors even though the assessee had died prior to the valuation date. Jamnadas' case : [1965]56ITR648(Bom) , in our view, cannot be taken as an authority for the proposition that where an assessee dies prior to the valuation date, the assessment should be made against the heir as an administrator or as a person administering the estate. The question so far as the assessment years 1964-65 and 1965-66 in the instant case are concerned will, therefore, have to be determined on the provisions of the Act itself.

27. In this context, it is necessary to refer to the provisions of ss. 19 and 19A of the Act. They read as follows :

'19.(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 wealth-tax assessed as payable by such person, or any sum, which would have been payable by him under this Act if he had not died.

(2) Where a person dies without having furnished a return under the provisions of section 14 or after having furnished a return which the Wealth-tax Officer has reason to believe to be incorrect or incomplete, the Wealth-tax Officer may make an assessment of the net wealth of such person and determine the wealth-tax payable by the person on the basis of such assessment, and for this purpose may, by the issue of the appropriate notice which would have had to be served upon the deceased person if he had survived, required from the executor, administrator, or other legal representative of the deceased person any accounts, documents or other evidence which might under the provisions of section 16 have been required from the deceased person.

(3) The provisions of sections 14, 15 and 17 shall apply to an executor, administrator or other legal representative as they apply to any person referred to in those sections.'

'19A. (1) Subject as hereinafter provided, the net wealth of the estate of a deceased person shall be chargeable to tax in the hands of the executor or executors.

(2) The executor or executors shall for the purposes of this Act be treated as an individual.

(3) The status of the executor or executors shall for the purposes of this Act as regards residence and citizenship be the same as that of the deceased on the valuation date immediately preceding his death.

(4) The assessment of an executor under this section shall be made separately from any assessment that may be made on him in respect of his own net wealth or on the net wealth of the deceased under section 19.

(5) Separate assessments shall be made under this section in respect of the net wealth as on each valuation date as is included in the period from the date of the death of the deceased to the date of complete distribution to the beneficiaries of the estate according to their several interests.

(6) In computing the net wealth on any valuation date under this section, any assets of the estate distributed to, or applied to the benefit of, any specific legatee of the estate prior to that valuation date shall be excluded. But the assets so excluded shall, to the extent such assets are held by the legatee on any valuation date, be included in the net wealth of such specific legatee on that valuation date.

Explanation. - In this section, 'executor' includes an administrator or other person administering the estate of a deceased person.'

28. A consideration of the scheme of these two provisions is necessary in order to decide the contention raised before us with regard to the liability of the assessee. Section 19 to 22 are contained in Chap. V which is headed as 'Liability to assessment in special cases'. Section 19A was enacted for the first time with effect from April 1, 1965. Thus, the provisions in Chap. V deal with assessment in special cases, and before any one of these provisions in Chap. V are invoked, it must be found that the general provisions relating to assessments are inapplicable to a case which is sought to be brought within the provisions in Chap. V. The marginal note to s. 19 reads : 'Tax of deceased person payable by legal representative'. If we contrast the provisions of s. 19 with those of s. 19A, it is clear that while s. 19 deals with the tax (liability) of a deceased person payable by the legal representative, s. 19A deals with assessment in the case of executors. Now, when s. 19 refers to the tax (liability) of a deceased person, it presupposes that the tax is payable by a deceased person. As already pointed out. Under s. 3 of the Act, the charge is attracted on the valuation date and whoever owns wealth which is assessable under s. 3 will, on the valuation date, become liable to pay the tax, though the quantum of the tax may be determined after the valuation date by the process of assessment. Section 19, therefore, obviously contemplates a case where a liability has accrued to the deceased person by virtue of the fact that he was alive on the valuation date but has died thereafter. The deceased may have filed a return. Or he may not have filed are turn, or the assessment may have been completed and he may not have paid the tax, it is to cover cases like these that the provisions of s. 19 appear to us to have been enacted. Section 19(1) provides that 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 wealth-tax assessed as payable by such person. Or any sum which could have been payable by him under this Act if he had not died, section 19(1) has, therefore, the effect of fastening a liability on an executor, administrator or other legal representative to pay wealth-tax assessed as payable by the person can be determined only if he was alive on the valuation date. The liability which is fastened by s. 19(1) is limited to the extent to which the estate is capable of meeting the charge, and it has to be paid out of the estate of the deceased. Section 19 is. Therefore, not a substantive provision but a mere machinery provision for assessment. More specifically, s. 19(2) provides for a case where a person dies without having furnished a return or he dies after having furnished a return, and in such a case the power is given to the WTO to make an assessment of the net wealth of such person. The power under sub-s. (2), therefore, is to assess the wealth of the person as on the valuation date before his death, by sub-s. (3) the provisions of ss. 15, 16 and 17 have been made applicable to the executors, administrator or other legal representative as they apply to any person referred to in those sections. We have, therefore, no doubt that so far as s. 19 is concerned, it positively deals with a case where an assessee dies after a relevant valuation date on which the deceased was liable to pay or any other sum, which would have been payable by him if he had not died has to be paid by the executor, administrator or other legal representative, subject to the limitation that it shall be paid out of the estate of the deceased and to the extent to which the estate is capable of meeting the charge.

29. When we now come to s. 19A, on which heavy reliance is placed on behalf of the assessee, it will be noticed that what has been made chargeable under s. 19A is the net wealth of the estate of a deceased person. As pointed out by this court in Jamnadas' case : [1965]56ITR648(Bom) , prior to the enactment of s. 19A. There was no provision in the Act which fastened a liability on the estate of a deceased person to be assessed to wealth-tax. The heading of the section itself indicates that it is intended to provide for assessment in the case of executors. Under s. 19(1) the estate of the deceased person is made chargeable to tax in the hands of the executor or executors. The word 'executor' has been given by the Explanation an extended meaning so as to deceased person. It is on this extended meaning that a contention has been advanced before us that the assessee was administering the estate of his deceased father and having regard to the provisions of sub-s. (4) of s. 19A, the assessment in respect of such assessee has to be made separately from the assessment that may be made on the assessee in respect of his net wealth. It is, therefore, necessary to consider the intent and the purpose of enacting s. 19A.

30. The provisions of s. 3, to which we have earlier referred, provide for a charge in respect of the net wealth of an individual and, as already pointed out, that individual must be a living person who must own property, and it is in respect of the assets belonging to him on the valuation date that the charge to wealth-tax is attracted. An executor appointed by a will or an administrator appointed by a court is not a person who owns any property in his capacity as an executor or as an administrator. They have no interest in the property like the interest of one who owns property. And the executor or the administrator who in the first case is the representative of there testator having been appointed by the will and in the second case derives his authority from an order of a competent court has only to function as long as the administration of the property is not complete. It is well established that an executor is a representative of the testator for all purposes, as will be clear from the provisions of s. 211 of the Indian Succession Act, 1926. That section provides that the executor or administrator. As the case may be, of a deceased person is his legal representative for all purposes, and all the property of the deceased person vests in him as such.

31. In Executors, Administrator and Probate by Williams and Mortimer (1970 Edn.), in Chap. 50 (at p. 458), dealing with the nature of the estate, the learned authors have observed as follows :

'The interest which an executor or administrator has in the property of the deceased is different from the absolute and ordinary interest which everyone has in his own property; for an executor or administrator has his estate as such in autre droit merely, viz., as the minister or dispenser of the property of the dead.'

32. Describing the executor as the person appointed by the testator to execute the will, the learned authors have observed as follows (p. 3) :

''To appoint an executor,' says Swinburne, 'is to place one in the stead of the testator, who may enter to the testator's goods and chattels. And who has action against the testator's debtors, and who may dispose of the same goods and chattels, towards the payment of the testator's debts, and performance of his will''.

33. So far as the administrators are concerned, the learned authors have pointed out at p. 235, that the office of an administrator resembles that of an executor, but since he has not been selected by the deceased, he is, in general, obliged to give a bond with sureties for the due performance of his duties. The authors have also pointed out that administrators are appointed in certain cases where the deceased left a will and in all cases where he died intestate and a grant is applied for. Dealing with the appointment of an executor, where the executor has died or renounced, where he is incapable of performing his office or where he has failed to take a grant after having been cited to accept or refuse a grant of probate, or cited to propound a will.

34. The same position obtains under the Indian Succession Act, 1925. It is no doubt true that an administrator could also be appointed in the case of intestate succession, because s. 217 of the Indian Succession Act provides that, 'save as otherwise provided by this Act or by any other law for the time being in force, all grants of probate and letters of administration with the will annexed and the administration of the assets of the deceased in cases of intestate succession shall be made or carried out. As the case may be, in accordance with the provisions of Pt. IX.' Letters of administration can be granted under s. 231 if an executor renounces, or files to accept an executorship, within the time limited for the acceptance or refusal thereof, and the will may be proved and letters of administration with a copy of the will annexed may be granted to the persons who would be entitled to administration in case of intestacy. It may also be pointed out that the provisions of s. 212(2) provide that the provisions of sub-s. (1) do not apply in the case of a Hindu.

35. However, the main contention which is advanced before us, relying on these provisions of the Indian Succession Act, 1925, is that in the case of intestate succession also an estate could be administered by obtaining letter s of administration and notwithstanding the fact that the assessee has not obtained any letters of administration, he would still be a person administering the estate of a deceased person within the meaning of the Explanation to s. 19A and, therefore, an executor for the purposes of s. 19A.

36. Now, when s. 19A provides for the estate of a deceased person being chargeable to wealth-tax in the hands of the executor, it became necessary for the Legislature to give an artificial status of an individual by specifically enacting in sub-s. (2) of s. 19A that the executor or executors shall, for the purposes of the Act, be treated as an individual. Sub-ss. (4) and (5) of s. 19A give a clear indication that s. 19A will be attracted only in a case where the deceased has left a will. Sub-s. (5) of s. 19A refers to the period of time during which the provisions of s. 19A can be effectively applied. While sub-s. (4) provides that an executor shall be assessed separately in respect of the net wealth of the deceased and his own net wealth, for which period this separate assessment in respect of the net wealth of the deceased is to be made is expressly indicated in sub-s. (5). Sub-section (5) provides that separate assessment shall be made under s. 19A in respect of the net wealth as on each valuation date as is included from the date of death of the deceased to the date of complete distribution to the beneficiaries of the estate according to their several interest. This is the period of time for which s. 19A operates. The provisions of sub-s. (5) also indicate that it will operate in a case where the estate is to be distributed to the beneficiaries of the estate according to their several interests, and when this provisions is made in the context of the assessment of executors, it is obvious that the distribution is contemplated according to the will left behind by the deceased. Sub-section (6) makes sit further clear that where any asset is distributed to or applied to the benefit of any specific legatee of the estate prior to a valuation date, such asset shall be excluded in computing the net wealth on any valuation date. It further provides that such assets which are excluded will be included in the net wealth of the specific legatee on the relevant valuation date. The scheme of s. 19A is thus clear that executors, who hold the property as representatives of the testator for the purposes of distribution of the property to the beneficiaries in accordance with the directions made in the will of the testator, are artificially given the status of an individual, so that the estate of the deceased which is not vested in any particular individual in ownership does not escape the liability to wealth-tax. Therefore, the Explanation which gives an extended meaning to the word 'executor' has to be construed as including within that term only such persons who are administering the estate in accordance with the directions of the will of the deceased. In other words, a person who becomes the owner of an estate by virtue of inheritance cannot fall within the residuary part of the Explanation, because the property which at once vested in such heir by virtue of inheritance belongs to him exclusively as owner thereof.

37. It is no doubt true that even in the case of intestate succession, letters of administration may be obtained, but the obtaining of letters of administration does not in any way affect the interest which is vested by way of inheritance at all. We may, in this context, refer to a decision of the Calcutta High Court in Mt. Kulwanta Bewa v. Karam Chand Soni : AIR1938Cal714 , where a Division Bench of that court has taken the view that merely because an estate is in the hands of an administrator. The beneficiaries are not rendered incompetent to deal with their beneficial interest and that under s. 211 of the Indian Succession Act, 1925, the estate vests in the executor or administrator as such, that is to say, for the purposes of representation. We have not been able to find anything in the provisions of the Indian Succession Act which has the effect of divesting an hei r who succeeds by inheritance to the property left by his father of any rights, even though it may be possible to obtain letters of administration in respect of the estate of the deceased.

38. The construction which we have placed on ss. 19 and 19A of the Act also finds support from the decision of the Madras High Court in A.& F. Harvey Ltd. v. CWT : [1977]107ITR326(Mad) . One Shri Harvey had died on March 28, 1956, and he had executed a will on November 30, 1956, appointing five executors and trustees of his will and one of them was his wife. The will was proved in England and the probate was granted in England. Harvey held 90,000 ordinary shares of the company incorporated in India called M/s. A. & F. Harvey Ltd. The administration of the estate devolved on and vested in the executors from the date of death of the testator. The department wanted to assess the value of 90,000 shares in the hands of the executors for the assessment year 1957-58 under the Act. The executors 'contention was that even for the assessment year 1957-58, they could not be taxed in respect of the said shares. The AAC had held that the executors could not be assessed in respect of the 90,000 shares, but the Tribunal, relying on the decision of this court in Jamnadas' case : [1965]56ITR648(Bom) , held that the executors could be assessed on the value of the said shares only for the assessment year 1957-58, and not for the subsequent assessment years. The department did not challenge this finding of the Tribunal, and only the executors had, in a reference made to the Madras High Court, contended that they could not be assessed in respect of the shares for the assessment year 1957-58, which was the assessment year corresponding to the financial year 1956-57, during which Harvey had died. The Madras High Court, after observing that for a person to be liable to pay wealth-tax he must be alive on the valuation date and must have wealth which is liable to tax as provided in that section on that date, pointed out that if the person died intestate the wealth would belong to his heirs and if he died after executing a will it would belong to the legatees and if executors or administrators have been appointed under the will, though the estate might vest in them for administration, still the ownership of the wealth would belong to the legatees under the will. The provisions of ss. 19(1) and 19A were considered by the Madras High Court, and with regard to these provisions it was observed as follows (p. 335 of 107 ITR) :

'Therefore, a reading of sub-section (1) and sub-section (2) of section 19 makes it absolutely clear that the said section has nothing whatever to do with the assessment to wealth-tax of the estate of a deceased who died even before the valuation date. The provisions contained therein clearly show that that section is concerned with a case where an assessee dies after the valuation date and has been assessed to tax before his death or dies after the valuation date but before filing a return or dies after the valuation date and after having filed a return which the Wealth-tax Officer consider to be incomplete or incorrect.'

39. Dealing with the provisions of section 19A, the Division Bench observed as follows (p. 336) :

'It is clear from the express language of this section that it provides for assessment of the assets of a deceased in the hands of the executor or executors. From the very nature of the case, the section will apply only to a cast where an assessee dies having executed a will and appointed an executor or executors. If he died intestate, the estate would have gone to his heirs, and, therefore, it is in the hands of the heirs that the assessment will have to be made and not in the hands of anybody else. Consequently, section 19A is confined only to a case where an assessee dies after executing a will and appointing an executor or executors, in such a case section 19A provides for the assessment of the estate of the deceased in the hands of the executor or executors till the administration is completed. A specific provision has been made in this section itself for the exclusion of a part of the assets of the deceased if the executor or executors had handed over that part to the persons who were entitled to it under the terms of the will. Hence, this section 19A which creates a special machinery for the purpose of assessing an executor or executors in respect of an estate of a deceased having come into force with effect from April 1, 1965, has no application to the present case.'

40. The view which we have taken with reference to the provisions of s. 19 is in accord with the view taken by this court in Jamnadas' case : [1965]56ITR648(Bom) , in so far as sub-ss. (1) and (2) of s. 19 are concerned. In Jamnadas' case, the Division Bench has observed that s. 19 does not create any new liability and that s. 19(1) is made only to provide for the liability of the administrator, executor or other legal representative of a deceased person to pay the tax and/or amounts assessed as payable by such person. The Division Bench in Jamnadas / case : [1965]56ITR648(Bom) has also taken the view that the ownership of the estate left by a deceased person, in law, becomes vested, when such person dies interstate in his heirs and legal representatives, and in other cases, when he dies testate, in executors, a proposition with which there can be no dispute.

41. There is, however, some difficulty in accepting the view which the Division Bench has taken on the provisions of s. 19(2) when the Division Bench observed (p. 653 of 56 ITR) :

'On a reading of section 19 also, particularly sub-section (2) thereof, it is clear that in respect of the financial year in which a person dies, liability is created against executors, administrators and legal representatives to pay wealth-tax as assessed in respect of the wealth of the deceased person.'

42. We have already pointed out that so far as the liability to assessment under the Act is concerned. The liability is not in respect of the ownership of the property during the entire financial year, but the liability is attracted in case of net wealth on the relevant valuation date. Therefore, in the context of the provisions of the Act, it will not be correct to say that s. 19(2) creates a liability in respect of a financial year. To more or less the some effect are the observations which are made at the bottom of p. 653 (of 56 ITR), where the Division Bench pointed out :

'The provisions in sub-section (2). When read with sub-section (1), clearly indicate that the provisions in this section were to enable the Revenue to recover wealth-tax in respect of the net wealth of the deceased person for the financial year in which the person died. Though such deceased person ceased to be the owner of all his properties at a moment which was not the end of the financial year, but legal fiction the tax was intended to be levied on the footing that he continued to own the estate left by him during the complete duration of the relevant financial year. The executors, administrators and other legal representatives were made liable to pay such wealth-tax for that relevant financial year from out of the estate left by the deceased person.'

43. Here again, these observations are base on the assumption that wealth-tax is recoverable for the financial year in which the person has died and that there is a legal fiction in s. 19. The decision in Jamnadas' case : [1965]56ITR648(Bom) shows that this view was almost wholly influenced by the construction placed by the Supreme Court on s. 24B of the Indian I.T. Act, 1923, in the case of CIT v. Amarchand N. Shroff : [1963]48ITR59(SC) , because at p. 654 of the report, the Division Bench had observed that the provisions of s. 19 of the Act and s. 248 of the Indian I.T. Act., 1922, were similar and there was no substantial different between the provisions of sub-s. (1) of both these sections. With respect to the learned judges who decided Jamnadas' case : [1965]56ITR648(Bom) . It appears that the distinguishing feature between the provisions of the Indian I.T. Act and the provisions of the Act was overlooked when support was sought from the construction placed on s. 248 of the Indian I.T. Act, 1922, in Amarchand N. Shroff's case : [1963]48ITR59(SC) . The two Acts are not in pari materia at all. The nature of the charge in the two Acts has no similarity. While under the Indian I.T. Act the liability to pay income-tax accrues on the income earned throughout the accounting year. The liability to be assessed to wealth-tax arises only in respect of the net wealth held on a particular date, namely, the valuation date. Therefore, if a person is not alive on the valuation date and he dies before the valuation date, under the provisions of the Act there is no question at all of that person being assessed to wealth-tax for any period prior to the valuation date, and, with respect, we may point out that the concept of assessment for the whole of the financial year appears to be foreign to the provisions of the Act.

44. The difficulty of drawing an analogy from the provisions of the Indian I.T. Act, with reference to an assessment under the Act, is pointed out by the Madras High Court in A. & F. Harvey Ltd.'s case : [1977]107ITR326(Mad) , when it dealt with the ratio of the decision of Jamnadas' case : [1965]56ITR648(Bom) , the Division Bench observed as follows :

'We may also point out that there can be no analogy of the provisions of the Income-tax Act with reference to the assessment under the Act, in the case of the Income-tax Act, a person, even if he died in the middle of an accounting year, might have earned taxable income during the course of that year before his death and, therefore, with reference to that income, he was liable to pay tax and assessment proceedings could be taken and tax could be recovered in the hands of his legal representatives out of the assets left behind by the deceased. But, as far as the Act is concerned. It is not an assessment in respect of the wealth continuing over a period, but in respect of the wealth as available on a particular date, namely, the valuation date. Therefore, there cannot be any analogy, true or false, between the relevant provisions of the Income-tax Act and the Act in this behalf, in view of this basic and fundamental difference existing between the chargeable events themselves.'

45. The Madras High Court has also pointed out that there is no fiction in s. 19 of the Act to the effect that even though the deceased died before the valuation date, he must be deemed to have lived till the valuation date.

46. Jamnadas' case : [1965]56ITR648(Bom) was considered by the Calcutta High Court also in CWT v. Executors to the Estate of Sir E. C. Benthal : [1977]106ITR57(Cal) , and in that context the difference between the provisions of s. 24B of the Indian I.T. Act, 1922, and s. 19(2) of the Act was pointed out as follows (p. 63) :

'Though the language used in section 24B of the Income-tax Act, 1922, and section 19(2) of the Wealth-tax Act are similar, the subject-matter of the charge and the scheme of these two Acts being totally different, these two sections cannot, in our opinion, operate on the same field, these two sections must be read and understood in their own context and must also be construed in the light of the respective schemes of the respective Acts including the respective charges under the respective Acts. These two Acts are not in pari materia as held by this court in the case of CIT v. Balai Chandra paul : [1976]105ITR666(Cal) , and, accordingly, I am not inclined to be inspired by the above decision of the Supreme Courts (in Amarchand N. Shroff's case : [1963]48ITR59(SC) , in construing s. 19(2) of the Wealth-tax Act.'

47. The Calcutta High Court in that case agreed with the decision of the Madras High Court in M. Thirumani Mudaliar v. CWT : [1974]96ITR152(Mad) . That s. 19 of the Act created a liability on the executors only for a limited purpose and that it was only after the amending Act of 1965, introducing s. 19A, came into operation that the executors became liable to be taxed as persons representing the deceased and that prior to the insertion of s. 19A the position was that no liability to pay wealth-tax was attached to the estate of a deceased individual which continued in the hands of the executors.

48. Shri Dastur has referred us to the decision of the House of Lords in IRC v. Wahl [1933] 17 TC 744, in support of his proposition that even in the case of a sole heir, letters of administration can be obtained. Now, while we cannot dispute the proposition that it is open to a sole heir to obtain letters of instant case is whether as a result of obtaining such letters of administration, an heir can claim that he has two personalities in so far as the wealth-tax is concerned. What was argued before us was that the assessee must be taken to have two personalities, one as an heir, who by inheritance has succeeded to the property of the deceased and the other, as an heir who is bound to pay off the debts of the deceased and recover debts due to the deceased. In this latter capacity, according to the learned counsel, he functions as if he is an administrator, and, therefore, so far as the estate of the deceased is concerned, that estate cannot be mixed up with the estate of the assessee himself for the purposes of assessment to wealth-tax.

49. We have already pointed out that the assessee having inherited the entire property of his father, his liability under the Act has to be determined solely with reference to whether the estate which has devolved on him can be described as his net wealth within the meaning of that term in s. 2(m). We have also pointed out that what is material for the provisions of s. 2(m) is that the wealth must belong to an individual on the valuation date. If by virtue of having succeeded to the property, the absolute ownership rights have vested in the assessee and this property belongs to the assessee, then this ownership is not in any way affected by the fact that he may be required to pay off certain debts or to recover certain debts which may be due from, or due to, his deceased father, if he recovers any debts he does so because the right to recover the debt has vested in him by inheritance and not as an administrator. There is thus no question of the assessee claiming the benefit of the extended meaning of 'executor' in the proviso in s. 19A of the Act. For the same reason, we must also reject the argument based on the authorities which deal with the executor shedding the character of an executor and assuming the character of a trustee, on which reliance was placed by Shri Dastur. The three decisions which were relied upon were : (1) Estate of J. K. Dubash v. CIT [1947] 16 ITR 90 . (2) Asit Kumar Ghose v. Commr. of Agrl. I.T. : [1952]22ITR177(Cal) and (3) Administrator-General of West Bengal for the Estate of Raja P. N. Tagore v. CIT : [1965]56ITR34(SC) . On the basis of these authorities, it was sought to be contended that as long as the administration of the estate of the deceased was not complete, the assessee cannot be said to have shed the character of administrator or a person administering the estate, and, in any case, according to the learned counsel, at least for the first year following the death of the deceased when estate duty returns had to be filed, the assessee must be taken to be functioning as if he was an administrator. Unfortunately for the assessee, it appears that the position in law is very clear that he cannot divest himself at his own sweet will of his status as the son of the deceased and who has succeeded to his father's property. There is no question of his shedding any character as an administrator before becoming the owner of the property. If inheritance can never be in abeyance and it takes effect from the moment of the death of the father of the assessee, then he becomes the owner of the property immediately on his father's death, and there is no question of any postponement or any further event necessary to make him the owner of the property.

50. Some reliance was placed by the learned counsel on a decision of this court, to which one of us was a party, in Income-tax Reference No. 171 of 1970, decided on March 8, 1979 [CIT v. Mrs. Usha D. Shah-since reported in : [1981]127ITR850(Bom) ], now, that was a case in which the husband of the assessee had died and the other members of the family of the husband had disputed the very status of the assessee as the wife of Dinesh, who had died. Admittedly, the entire estate left behind by dinesh was being managed by Dinesh's mother or the assessee's mother-in-law. There was ultimately a settlement between the assessee and the other members of the family, as a result of which the assessee had received a sum of Rs. 10,70,000, in full satisfaction of her claim as the widow of deceased, Dinesh. This settlement took place on August 16, 1963. In the assessment of the assessee for the assessment years 1962-62, 1962-63 and 1963-64, the assessee had disclosed certain income which did not include any part of income from the estate left behind by Dinesh. What the ITO wanted to do was that he wanted one-sixth share of the income arising from the property, business and other sources of the HUF of Kantilal Manilal. The father of Dinesh, to be included as the income of the assessee. The income of the entire property of Dinesh was shown by the mother-in-law in her return, and the ITO wanted one-sixth of that income to be included in the income of the assessee. The compromise which had taken place specifically provided that till such time as the distribution of the estate did in effect take place, the income before distribution of the estate had to be taxed in the hands of the mother-in-law, in her capacity as the administrator of the estate. On those facts the Division bench held that the estate was being administered by the mother-in-law and having regard to the provisions of s. 168, the income of the estate must be taxed in her hands. It is difficulty for us to set how this decision is of any avail to the assessee. We have already pointed out that s. 19A is a special provision, and unless a person falls within the provisions of s. 19A, it will not be possible to give him the benefit of s. 19A, the operation of which. We have found, is attracted only in a case where the deceased has left a will. No argument can, therefore, be advanced in favour of the contention raised by the assessee on the basis of the decision in Mrs. Usha D. Shah's case : [1981]127ITR850(Bom) .

51. Having regard to the discussion made earlier, we must hold that the assessee was not entitle to the benefit of the special provision in s. 19A of the Act, and questions Nos. 2 and 4 will, therefore. Have to be answered in the affirmative and against the assessee.

52. Coming to question Nos. 1 and 3, the answer is apparent from the definition of 'net wealth'. The provisions of s. 2(m) require that while determining net wealth from the aggregate value of the assets on the valuation date, the aggregate value of all debts owed by the assessee on the valuation date should be deducted. Now, when the matter was dealt with by the AAC, it appears that by that time the liability in respect of income-tax, super-tax, wealth-tax, expenditure-tax and gift-tax, which have been compendiously referred to as liability on account of direct taxes, came to be crystalised and finally determined, the assessee, therefore, claimed that the liabilities which had now been crystallised should be allowed to be deducted. The AAC did not accept this contention, but the Tribunal has taken a view to the contrary, and it is that view which is now put in issue in questions Nos. 1 and 3.

53. Now, when the definition of 'net wealth' refers to debts owed, it is no doubt true that at the stage of the filing of the returns, only the estimated amount of taxes can be claimed as deduction for the purposes of wealth-tax. But it is also equally true that once for those years the amounts have come to be determined during the pendency of the assessment proceedings in respect of wealth-tax, this determination will relate back to the respective assessment years, and, therefore, in place of what was an estimated amount of debt due, the assessee will be entitled to ask for the exact amount of debt due in the form of liability for the payment of direct taxes. We have, therefore, no doubt that the assessee was justified in asking for a deduction of the exact amount of taxes which came to be determined finally during the pendency of the assessment proceedings under the Act. We are, therefore, unable to find any infirmity in the view taken by the Tribunal when it reversed the order of the AAC. Consequently, questions Nos. 1 and 3 will have to be answered by holding that the taxes ultimately found payable are to be deducted.

54. The questions referred to us are thus answered as follows :

Questions Nos. 1 and 3 : The taxes ultimately found payable are to be deducted.

Question Nos.2 and 4 : In the affirmative and in favour of the Revenue.

55. The assessee to pay the costs of this reference.


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