1. This reference arises out of assessment proceedings under the I.T. Act, 1961, in respect of assessment years 1961-62, 1962-63 and 1963-64. The assessee in this case was also the assessee in W.T. Reference No. 23 of 1971 which we have decided to-day. It is not necessary for us to set out again all the relevant facts in this reference. the assessee in the relevant assessment years 1961-62, 1962-63 and 1963-64, filed returns in response to a notice under s. 143(2) showing her income as follows :
Rs.Assessment year 1961-62 3,589Assessment year 1962-63 5,423Assessment year 1963-64 6,070
2. In the course of these assessments, all of which were made after August 16, 1963, which is the date on which the compromise between the assessee and other members of the family has taken place, by virtue of which the assessee received Rs. 10,70,000 in full satisfaction of her claim as the widow of the deceased, Dinesh, the ito sought to add one-sixth share of the income arising from the property, business and other sources of the HUF of Kantilal Manilal. Dinesh was a member of this HUF during his lifetime. When this one-sixth share of the income of the HUF of Kantilal Manilal was sought to be added, it was the contention of the assessee that she had not received any part of her share as the heir of the deceased, Dinesh, and she was, therefore, not liable to be taxed on that income. She positively pointed out that the entire property was being managed by her mother-in-law. It appears that the ITOs who dealt with the matter separately in each of the years had also before them a return filed by the mother-in-law, Pushpavati, and the figures which were sought to be taken into account as one-sixth share of the assessee by virtue of her being the widow of Dinesh were taken from the returns filed by Pushpavati. Thus, additions were made in all the three years to the extent of one-sixth share of the income from property, business and other sources, that is, dividend income and interest income of Kantilal Manilal, HUF.
3. These assessment orders were challenged by the assessee by appeals filed before the AAC. The AAC who decided the three appeals took the view that the assessee's right in the estate of her deceased husband was not recognised when she made a claim to the estate as a widow of the deceased after she returned from the United States of America. He also found that the income of the estate for the period in question remained undistributed and had of necessity to be assessed in the hands of the executor or administrator of the said estate in terms of the provisions of S. 168 of the I.T. Act, 1961. He referred to the compromise which took place in 1963 and then took the view that 'till such time as the distribution of the estate did in effect take place, the income from the distribution of the estate had to be taxed in the hands of the mother-in-law, Bai Pushpavati, in her capacity as administrator of the estate'. An additional reason which was given by the AAC for allowing the appeal was that the assessee had not received any such income during the intervening period and she was, therefore, not liable to tax in respect of such income. He considered whether the assessee could be made liable on accrual basis and found that there was no liability on the assessee even on accrual basis inasmuch as her right to receive such income was never recognised during that period. thus, allowing the appeals, the AAC deleted the additions made by the ITO representing the assessee's share in the income of the estate of Late Dinesh Kantilal.
4. The ITO filed appeals challenging the orders of the AAC. the appeal filed by the ITO in respect of the assessment year 1961-62 was disposed of by the Tribunal by a consolidated order by which the tribunal also disposed of the appeals filed by the ITO, A reference out of which have just decided. The tribunal has taken the view that the income of the state would be assessable in the hands of pushpavati as an adinistratrix or in the hands of any other person who might actually have been administering the estate. The Tribunal further observed that interference and intermeddling with the estate would also amount to administration thereof. Thus, holding that the assessee did not receive income either in her personal capacity or in her capacity as an administrator, the Tribunal held that she was not liable to tax thereon. While the appeal in respect of the assessment year 1961-62, was thus disposed of by the consolidated order dealing with the wealth-tax appeals also, the appeals in respect of the assessment years 1962-63 and 1963-64 were disposed of by a short order in terms of the order in appeal in respect of the assessment year 1961-62. The result was that the orders of the aac in respect of the three assessment years were upheld.
5. At the instance of the revenue, the following question has now been referred to this court for opinion :
'Whether the assessee was liable to income-tax assessment for the assessment years 1961-62 to 1963-64, in respect of any income arising from the undistributed personal estate of her deceased husband and in respect of any income arising from the undistributed share of the interest of the deceased in the joint family of his father kantilal
6. After having heard the learned counsel for the revenue and for the assessee, we are satisfied that there is no reason in this case to take a view different from the one which has been taken by the Tribunal. Both the tribunal and the aac have taken the view and have found as a fact that during the relevant years, the assessee was not in any way concerned with or was not in possession of any part of the estate of the deceased, Dinesh. It is also found as a fact that the estate was being administered by bai Pushpavati. Such a case, in our view, is expressly covered by the provisions of S. 168 of the I.T. Act, 1961, sub-s. (1) of which reads as follows :
'Subject as hereinafter provided, the income of the estate of a deceased person shall be chargeable to tax in the hands of the executor, -
(a) If there is only on executor, then, as if the executor were an individual; or
(b) If there are more executors than one, then, as if the executors were an association of persons;
and for the purposes of this act, the executor shall be deemed to be resident or non-resident according as the deceased person was a resident or non-resident during the previous year in which his death took place.'
7. The Explanation to s. 168 is relevant. It reads as follow :
'In this section, 'executor' includes an administrator or other person administering the estate of a deceased person.'
8. The effect of s. 168 is that it is made obligatory that the estate of a deceased person is charged to tax in the hands of an executor. It is important to note that the words used are 'estate of a deceased person shall be chargeable to tax in the hands of the executor'. The provision in s. 168(1) does not, therefore, seem to leave any discretion to the income-tax authorities in respect of assessing the income of the estate of a deceased person to tax. Such income is to be taxed in the hands of the executor. The word 'executor' is not to be understood in the restricted sense of the term because by the explanation it has been given an extended meaning to include an administrator or other person administering the estate of a deceased person. A person who is actually administering the estate of a deceased person, therefore, would for the purposes of s. 168 be an executor in whose hands the income of the estate of the deceased person must be charged to tax. The extended definition is obviously intended to include a person who is in de facto management of the property of the deceased person. It is true that dinesh in this case has not left any will. There was no executor in that sense nor were any letters of administration obtained, but the mother of Dinesh was in fact in management of the entire estate of dinesh after his death. in view of the wide definition of 'executor' made by the Explanation, she would be covered by the definition and, as earlier pointed out, since there was no discretion left with the tax authorities, the income from the estate of Dinesh could be charged to tax only in the hands of his mother, Pushpavati. the necessary consequence must be that the income which was sought to be included as income of the assessee could not be brought to tax in her hands. In our view, the AAC and the Tribunal had taken a correct view of the scope of the provision of s. 168 of the Act. Having regard to the circumstances, therefore, it is obvious that the income arising from the undistributed personal estate of dinesh or income from the undistributed share of the interest oaf the deceased could not be taxed in the hands of the assessee.
9. The question referred to us must, therefore, be answered in the negative and in favour of the assessee. In the circumstances of the case, there will be no order as to costs.