S.T. Desai, J.
1. Mr. Amarchand Shroff who was an attorney of this Court and a partner in the firm of attorneys Messrs. Amarchand and Mangaldas died on 7-7-1949. There were three partners in the firm, Mr. Amarchand, Mr. Mangaldas and Mr. Hiralal. Mr. Remesh, son of Mr Amarchand joined the firm as a partner on 1st December 1949 and an arrangement was arrived at between him and the continuing partners after the death of Mr. Amarchand. In respect of work done prior to 7-7-1949, the realisation was to be divided between all the three previous partners; in respect of work done between 8-7-1949 and 30-11-1949, it was to be divided between Mr. Mangaldas and Mr. Hiralal and realisations made in respect of work done after 1-12-1949 was to be divided between the tow old partners and the new partner Mr. Ramesh. Mr. Amarchand was being taxed on cash basis. Large sums of moneys were realised during the subsequent five years after Mr. Amarchand's death and the amounts paid to his estate were Rs. 37,847/-, Rs. 43,162/-, Rs. 34,899/-, Rs. 13,402/- and Rs. 32,523/-. The Department sought to tax these realisations as income in respect of the work done by Mr. Amarchand prior to his death. These amounts were assessed in the hands of an entity styled as 'the heirs and legal representatives of late Mr. Amar chand N. Shroff' and the status of that entity was described to be that of a H.U.F.
2. The matter was carried to the Tribunal and the two members of the Tribunal took divergent views on certain aspects of the same, but they were agreed that the income in question could not be assessed as income of the assessee i.e. 'the heirs and legal representatives of late Mr. Amarchand Shroff'. The Judicial Member took the view that it could not by any stretch of imagination be said that the receipts were the income of the heirs assessable as their, income and he held that the amounts could not be assessed as income of the assessee-heirs and he concluded in favour of the assessees. The Accountant Member stated in his order that what the Department should have done was that they should have assessed the H.U.F. consisting of the two sons of Mr. Amarchand and his window. He further held that the realisations which went to the share apportionable to Mr. Amarchand in respect of work done during his life time could not be treated as the income of the H.U.F. His view was that these outstanding would form part of the estate of the deceased as at the time of his death as they were out standings due to the estate of the deceased. He also expressed the view that the realisations received of capital and not of income. The matter at that time rested with the decision of the Tribunal.
3. Sometime later the Income Tax Department initiated proceedings under Section 34 in respect of the same income in the hands of an entity styled as 'Shri Amarchand N. Shroff by his legal heirs and representatives.' The status of that entity was given to be that of an individual and not of an H.U.F. The attitude taken up by the Department, somewhat curious, was that the assessment was being made on the deceased himself. although that was contrary to the recognised principle that there can be no assessment on a dead man, he having gone beyond the jurisdiction of the Department.
4. The Appellate Assistant Commissioner set aside the assessment which was made by the Income Tax Officer after adopting proceedings under Section 34. He decided the matter on the ground that the notices under Section 34 were invalid. The matter this time also was carried to the Tribunal. Some of the contentions of the assessees were negatived, by the Tribunal, but we are not concerned with them. In deciding the matter in favour of the assessees the Tribunal observed that they were unable to understand how any assessment could be made on a dead person. Reliance was placed before the Tribunal on Section 24B. We shall presently set out the relevant part of that section. Fro the present purpose it will suffice to observe that Section 24B deals with tax on income of a deceased person payable by his representatives. It has always been taken as firmly established that Section 24B only deals with income which had accrued to or had been received by a person who dies, but who had not been assessed and tax had not been recovered in respect of that income. The Tribunal took the view that Section 24B had no application to the matter. As to the proper and correct entity to be taxed, the Tribunal accepted the contention of the assessees, and according to the Tribunal that entity was the H.U.F. consisting of the two brothers and their mother. It was observed by the Tribunal that it was the H.U.F. who had received the out standings form the partnership firm of Solicitors. The Tribunal also reiterated what had been stated in the earlier, appeal that in the hands of the H.U.F. the income could not be brought to tax, being of a capital nature.
5. The matter comes before us on this Reference at the instance of the Commissioner and the question that we are called upon to determine is :
'Whether on the facts and in the circumstances of the case, the sums of Rs. 37,847/-, Rs. 48,162/-, Rs. 34,899/-, Rs. 13402/- and Rs. 32,523/- were assessable to income tax in the hands of the assessee 'Amarchand N. Shroff by his legal heirs and representatives' in the five respective years under reference?'
6. The matter has been argued before us by Mr. Joshi with his usual fairness. Although Mr. Joshi has not conceded any pint, he has very fairly stated that the task of the Revenue would be difficult if the case cannot be brought within the language and ambit of Section 24B. In our judgment the only contention that can possibly be raised by the Revenue in a case of this nature would be that the case falls within the ambit of Section 24B. Therefore, it will be convenient if we first dispose of the other submission of Mr. Joshi. It is stated that even if the case does not fall under Section 24B the receipts were of the nature of income and that in the hands of the assessees, who are the heirs of the deceased, the character of the receipts would not change. It would be income in their hands. Now, this contention is obviously untenable. If it was not the income of the deceased, it must be the income of the heirs if it is to be liable to be taxed. It is difficult to see how these realisations can be described as the income of the heirs. The nature of these realisations in the hand s of the assessees would evidently be part of the estate of the deceased and would be capital receipts.
7. To turn to the principal contention urged before us by Mr. Joshi, it will be convenient before examining the argument of learned counsel to set out the relevant parts of Section 24B. Sub-sections (1) and (2) of Section 24B run as follows:
'24B (1) When 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 tax assessed as payable by such person, or any tax which would have been payable by him under this Act if he had not died.
(2) Where a person dies before the publication of the notice referred to in Sub-section (1) of Section 22 or before he is served with a notice under Sub-section (2) of Section 22 or Section 34, as the case may be, his executor, administrator or other legal representative shall, on the serving of the notice under Sub-section (2) of Section 22 or under Section 34, as the case may be, comply therewith, and the Income Tax Officer may proceed to assess the total income of the deceased person as if such executor, administrator or other legal representative were the assessee.'
It is stated that although Sub-section (1) speaks of the tax assessed as payable and the marginal note speaks of tax of deceased person payable by representative, it is implicit in the word 'tax' that it is a tax on the income of the deceased person. So far, we are in agreement with Mr. Joshi. The tax, of course, is income tax & it can only be on the income of the deceased person. But the difficulty of Mr. Joshi starts immediately one begins to proceed henceforth. The plain meaning of the expression used in Sub-section (1) viz. 'tax of deceased person' which we must read as 'tax on the income of a deceased person' postulates that the income was the income of the deceased person. Therefore, what cannot be said to be the income of a deceased person is outside the purview of this section, which is the only provision in the Income Tax Act which deals with the income of a person who dies without paying income-tax in respect of the same.
8. Faced with this difficulty, learned counsel sought to derive support form the words at the end of the section viz. 'or any tax which would have been payable by him under this Act if he had not died'. Now, these words have to be read in their own context and teh context clearly is of the income of a deceased person earned before his death. Therefore, here again the argument has to be thrown back from where it stated. But the language of Sub-section (1) is not the only difficulty in the way of Mr. joshi. Sub-section (2) which deals with the same subject has to be examined in order that the entire section is read in harmony and as one enactment. The words towards the end of that Sub-section 'the Income Tax Officer may proceed to assess the total income of the deceased person' are clearly and only referable to the income of the deceased person during his lifetime. It is that income in the context of which reference is made in Sub-section (2) to the notices under Section 22 and Section 34. There is another aspect of the language of Sub-section (2) and that is in the words 'as if such executor, administrator or other legal representative were the assessee'. These words do no more than emphasize the basic concept that the assessee must be a person in existence. The concept of the assessee as a jural person in income-tax law is of a person in existence though a person may become an assessee by fiction of law. The assessee, where the income of the deceased person is to be taxed, is not his estate, but his executor administrator or other legal representative of the deceased person as if he himself was the assessee. The income, therefore, which can be assessed is either the income of the deceased assessee before his death or the income of the executor, administrator or other legal representative received by him in that capacity and the latter is to be regarded for all purposes of income-tax law as the assessee. It is suggested by learned Counsel that it could not have been the intention of the Legislature to allow income of the type before us to escape assessment. But we are not concerned with the supposed intention of the Legislature, which is at times extremely difficult to ascertain and particularly in case of some provisions of the Income Tax Act. We are concerned with what the legislature has said it meant. Ordinarily, what would have been the income of a deceased person, when received by an executor, administrator or other legal representative would be 'income' in his hands also, for instance, income of dividends, interest on securities rents and similar categories of income. But there can be and there are categories, for instance realisations of the nature before us, where it would be impossible to equate the receipt with 'income' when clearly it would have to be regarded as a capital receipt. Therefore, on a plain reading of Section 24B, we see nothing in its language which permits of that section being invoked in favour of the Revenue.
9. We shall now turn to the authorities on the subject which have been cited before us by Mr. Joshi and see if there is anything in those decisions which supports a contrary view. In Allen Murray v. Trehearne (Inspector of Taxes) (1938) 6 I.T.R. 172, a sum of money was payable under a service agreement on the final termination of service of the employee and in lieu of a pension a sum was payable. A sum of & 10,000/- was paid to the executors of the will of the deceased employee who died while holding his office. It was held that the amount was properly chargeable to the executors to the same extent as it would have been chargeable to the deceased if he had been alive. Now, there is one observation in the judgment of Lawrence J. in that case on which counsel has tired to rely and that observation is :
'They might suppose anything and the Sub-section only refers to the one supposition - namely, that the deceased had not died - and gives no other guidance.'
That concept is present in our Section 24B in express terms. But there is no warrant for reading that observation as suggesting that what could not be the income of the deceased was to be treated as income of the deceased. Moreover, the case turned on the language of the relevant sections of the Finance Act, 1927.
10. The next decision to which Mr. Joshi has drawn our attention is In re, Sreemati Usharaji : 10ITR199(Cal) . In that case the managing agent of a limited company died on 12-5-1938. At the time of his death a sum of Rs. 18,184/- stood to his credit with the company and that was in respect of commission earned by him prior to the date of his death. That sum was paid to his widow and legal representative after his death, and the question arose whether it could be assessed to income-tax under the provisions of Section 24B. It was held that under Section 7 of the Act commission was assessable in the hands of the managing agent at the time of his death as salary due to him and as his widow had received the commission without any deduction of income tax she was rightly assessed under Section 24B. It will be noticed that that was a case of an amount which had already been due to the deceased. It was not the case of any receipt which was not the income accrued to or received by the deceased person.
11. Learned counsel has also drawn our attention to the case of Commissioner of Income Tax Bombay City v. James Anderson : 26ITR699(Bom) . In that case there are some observations which relate to Section 24B. The observations relied upon are these:
'It is said that an administrator or an executor is only liable to pay tax which the testator would have been liable to pay and as these capital assets were not sold by testator it is suggested that there is no liability upon the executor or the administrator. Now, that contention is obviously untenable. Section 24B casts a liability upon the executor or the administrator to pay tax which the testator would have been liable to pay if he had not done so. But Section 24B does not limit the liability of the administrator or the executor only to the cases referred to in Section 24B. An administrator or an executor is as much an assessee under the Act as any other individual and if he carries on business or makes profit or receives dividends or makes capital gains, he is as much liable to pay tax as any other individual.'
These observations do not carry the case of Mr. Joshi any further.
12. One more decision cited by Mr. Joshi is In re B.M. Kamdar : 14ITR10(Bom) . In that case nothing turned on Section 24B. Mr.Joshi has relied on certain general observations made in the judgment in that case and which relate to the nature of income. Now, we are in respectful agreement with the observations of Kania J. and Chagla J. as they then were, but the observations have little bearing on the issue before us and it is not necessary for us to discuss in this judgment the general nature and incidents of income in the context of tax law.
13. Another aspect of this matter presented by learned counsel for the Revenue is founded on the concept that receipts after death did not change the character of the income. We have already made reference to this point and it is not necessary for us to discuss the same. We only mention it to note the argument sought to be founded on this concept. In the view we take of the matter, it is not necessary to discuss the question about H.U.F. which was argued before the Tribunal. The whole argument turns principally on the application of Section 24B and the view we take of the matter is in favour of the assessees.
14. Our answer to the question will be in the negative.
15. Commissioner to pay the costs.