1. In this reference made at the instance of the revenue, the following question has been referred to us for our opinion:
'Whether the Income-tax Appellate Tribunal was right in law in holding that half share of the income in respect of the estate of late Shri Balabhai Damodardas was not taxable in the hands of the assessee when the estate was being administered by Shri Sakarlal Balabhai, having regard to the provisions of section 168 of the Income-tax Act, 1961 ?'
2. We are concerned in this the case with assessment years 1963-64 to 1967-68, the relevant accounting years being the previous samvat years. The assessee is an individual. The assessee's grandfather, Balabhai Damodardas had made a will on October 6, 1956, leaving one-half of his estate to the assessee and the other half to the assessee's brother, Nandkishore. Balabhai Damodardas died on December 31, 1957. Balabhai was possessed of considerable movable properties acquired by him personally and held by him in his individual capacity. Moreover, he had one-half share in the coparcenary properties and the remaining half share belonged to Sakarlal. Under the will of Balabhai it was provided that after discharging all debts, liabilities and obligations and after meeting the expenses of illness, obsequial ceremonies and disbursing charities out of his self-acquired properties, the said properties as also his right, title and interest in the coparcenary properties would on his death devolve upon the two grandsons of Balabhai, namely, the assessee and his brother, Nandkishore, and in accordance with the terms of the will the deceased and his brother were to become entitled to use and enjoy the same. No person was named in the will as the administrator or executor of the will and according to the provisions of the will the legatees themselves were to take possession of the properties of the testator on his death.
3. For the four assessment years under consideration and even in the earlier years Sakarlal Balabhai describing himself as the legal representative of Balabhai Damodardas furnished returns in respect of the income of the estate of Balabhai Damodardas and filed the returns as the legal representative of Balabhai Damodardas. The returns submitted to the ITO having jurisdiction in the matter showed the necessary details of the income of the estate. Sakarlal was assessed in respect of such returns and the assessments were raised in the name of Sakarlal Balabhai, legal representative of late Balabhai Damodardas. For the assessment years under consideration the ITO sought to charge one-half of the income of the estate in the hands of the assessee. The assessee's case before the I.T. authorities was that since the administration and distribution of the estate had not been completed till August 5, 1970, during the assessment years under consideration only Balabhai could be assessed in respect of the income from the estate. It may be pointed out that the assessee and his brother had also taken up similar contentions regarding their liability to assessment under the W.T. Act in respect of the estate left to them by their grandfather, Balabhai Damodardas.
4. In respect of the wealth-tax assessments for the assessment years 1963-64 and 1964-65, the dispute came ultimately on a reference to the High Court and the decision of the High Court is in Navnitlal Sakarlal v. CWT : 106ITR512(Guj) . In that case, a Division Bench of this High Court consisting of one of us (Divan C. J.) and P. D. Desai J., held that under the will of Balabhai, on the death of the testator, the legatees were to get an interest in his separate properties as well as in his share in the coparcenary properties and they were to become entitled to use and enjoy the same after making provision for discharging the debts and liabilities and payment of certain expenses out of the self-acquired properties of the testator. According to the principles of Hindu law and the provisions of s. 6 of the Hindu Succession Act, 1956, the assessee and his brother became entitled under the will to inherit one-half share of the deceased in the coparcenary properties. From the point of the death of Balabhai, the HUF, and the heirs of the deceased coparcener, Balabhai, would hold the coparcenary properties as tenants-in-common, each having defined shares in the properties which belonged to the HUF. The heirs of Balabhai would also take the share of the deceased coparcener, Balabhai, in the properties of the HUF as tenants-in-common. The result was that each of the heirs on the one hand and the HUF on the other would have, until partition by metes and bounds took place, an undivided specific share in each and every one of the properties of the coparcenary.
5. As regards the separate properties of Balabhai, it was held by the Division Bench that under the will, the assessee and his brother were to use and enjoy as owners the separate properties of their deceased grandfather after first paying the debts and meeting other expenses and making provision for charity. The assessee and his brother could, therefore, be called residuary legatees. The true character or status of the assessee was that of a legatee of an equal share in the clear residue. Though the residuary legatee was not entitled to immediate possession of the testator's estate or any part thereof, and had no right to claim any interest, whether legal or equitable, in any specific asset or each and every asset of which the estate consisted, the right to receive the clear residue, that is, what remained of the estate after satisfying the debts and legacies, became vested in the legatees on the testator's death. This residuary estate was vested in the legatee right from the day of death of the testator and that right remained the same both before and after the completion of the administration, notwithstanding that it was not till the administration was complete that the residuary legatee could say that any particular asset or any particular income was his. The right to receive the clear residue, even though the date of actual receipt was deferred, was still property and constituted an asset for the purpose of wealth-tax. Therefore, the interest which devolved upon the assessee under the will in the surplus, if any, of the separate property of his grandfather was an asset belonging to the assessee on the relevant valuation dates and could also be legitimately taken into account in computing his net wealth. The Division Bench held that the properties bequeathed to the assessee under the will executed by his grandfather were includible in the net wealth of the assessee in the wealth-tax case.
6. It may be pointed out that as regards the estate left by Balabhai Damodardas, the order under the E.D. Act was passed on December 30, 1961, levying an estate duty in the sum of Rs. 1,04,000 odd and by March 31, 1963, out of this aggregate amount of Rs. 1,04,000 odd, a sum of Rs. 53,000 odd had been paid already and the balance of approximately Rs. 51,000 remained to be paid at the commencement of the assessment year 1963-64. Before the ITO and also before the Tribunal considerable emphasis was laid on behalf of the assessee on the fact that the provisions of s. 168 of the I.T. Act as it stood right from its enactment in 1961 were different from the provisions of the W.T. Act which were in force up to March 31, 1965. It was only with effect from April 1, 1965, that the W.T. Act was amended by inserting s. 19A in the W.T. Act and on behalf of the assessee, both before the Tribunal and before us, it was emphasised that it was in the absence of the provisions of s. 19A in the W.T. Act that the decision was delivered by this High Court in Navnitlal Sakarlal's case  106 ITR 512. The Tribunal came to the conclusion that the assessee was not taxable in respect of any part of the income of the estate of late Balabhai Damodardas for the years under appeal and the main ground was that since the administration of the estate of the deceased was not completed till August 5, 1970, and the actual distribution of the estate of Balabhai had not commenced before August 5, 1970, for the four assessment years under consideration in the instant case, in view of the provisions of the Explanation to s. 168 of the I.T. Act, the income of the estate could only be charged in the hands of Sakarlal Balabhai as the legal representative of Balabhai Damodardas.
7. We may point out that in view of the distinction between the provisions of the W.T. Act and the I.T. Act and in view of the fact that for the relevant years under consideration before the Division Bench which considered the wealth-tax case, namely, assessment years 1963-64 and 1964-65, s. 19A was not on the statute book, the decision in the wealth-tax case will not affect the decision in this case except in an indirect manner. We have to examine the case ourselves on the provisions of the law as it stood at the relevant time.
8. In order to appreciate the contentions before us, it is necessary to go to s. 168 of the I.T. Act, 1961, as it stood at the relevant time. Under sub-s. (1) of s. 168, subject as provided in the section thereafter, 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 one 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 the 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.
Under sub-s. (2), the assessment of an executor under the section shall be made separately from any assessment that may be made on him in respect of his own income. Under sub-s. (3), separate assessment shall be made under the section on the total income of each completed previous year or part thereof as is included in the period from the date of death to the date of complete distribution to the beneficiaries of the estate according to their several interests. Under sub-s. (4), in computing the total income of any previous year under the section, any income of the estate of that previous year distributed to, or applied to the benefit of, any specific legatee of the estate during that previous year shall be excluded; but the income so excluded shall be included in the total income of the previous year of such specific legatee. The Explanation to s. 168 is material for the purpose of this judgment and the Explanation reads:
'In this section, 'executor' includes an administrator or other person administering the estate of a deceased person.'
9. It is worthwhile noting that this definition is an inclusive section and hence by well-settled canons of construction of statutes, the word 'executor' in s. 168 means an executor as known under the Indian Succession Act as well as an administrator known under the Indian Succession Act and, what is more, any other person administering the estate of a deceased person is also included in this special definition of the word 'executor' though, under the Indian Succession Act, such other person administering the estate of the deceased would never be referred to either as an 'executor' or as an 'administrator'. Under the scheme of the Indian Succession Act, an executor is the person who is named in the will by the testator himself for administering his estate whereas an administrator is a person appointed by a competent court to administer the estate of a deceased person. By the extended definition set out in the Explanation to s. 168 of the I. T. Act, 1961, an executor and an administrator appointed by the court and any other person administering the estate of a deceased person are all included in the extended meaning of the word 'executor' for the purposes of s. 168. Under s. 159 of the I.T. Act, 1961, it has been provided that where a person dies, his legal representative shall be liable to pay any sum which the deceased would have been liable to pay if he had not died, in the like manner and to the same extent as the deceased. Under s. 2(29) of the I.T. Act, 1961, a 'legal representative' has the meaning assigned to it in clause (11) of s. 2 of the CPC, 1908. When one turns to the CPC one finds that s. 2(11) of the CPC defines a 'legal representative' to mean a person who in law represents the estate of a deceased person, and includes any person who intermeddles with the estate of the deceased and where a party sues or sued in a representative character the person on whom the estate devolves on the death of the party so suing or sued. Therefore, reading the provisions of s. 2(11) of the CPC in the light of the provisions of s. 2(29) of the I.T. Act, 1961, and the provisions of s. 159 of the I.T. Act, 1961, it is clear that an executor who certainly represents the estate of a deceased person in law and an administrator who also similarly represents the estate of a deceased person in law, and what is more, any person who intermeddles with the estate of the deceased, all fall within the definition of 'legal representative' for the purpose of the I.T. Act and it is such a legal representative who is referred to in s. 159 of the I.T. Act and it is such a legal representative who is liable to pay any sum which the assessee would have been liable to pay, if he had not died, in the like manner and to the same extent so far as the provisions of the I.T. Act are concerned.
10. Mr. G. N. Desai, learned counsel for the revenue, took us through the provisions of the Indian Succession Act and tried to point out that an executor derives his authority from the will of the testator and an administrator derives his authority from the grant of letters of administration to him. Such grant may be either with the will annexed or may be by way of limited grant or it may be grant of letters of administration pendente lite or may be granted to a receiver on the death of a person when the will is in dispute and it may be when the administration is de bonis non and, lastly, it may be by way of a curator.He contended before us that under s. 303 of the Indian Succession Act provision is made for the liability of a person who intermeddles with the estate of the deceased, who is described as an executor of his own wrong. According to Mr. Desai, Sakarlal Balabhai who was neither an executor named in the will nor was an administrator appointed by a competent court, was a person who intermeddled with the estate of the deceased, Balabhai Damodardas, and, therefore, he was an executor of his own wrong. According to Mr. Desai, an executor of his own wrong did not fall within the definition of the word 'executor' occurring in s. 168 of the I.T. Act, 1961. We are unable to accept this contention of Mr. Desai. Whatever the position might have been prior to the enactment of the I.T. Act, 1961, so far as this Act is concerned, any person who in fact administers an estate of a deceased person either by intermeddling with it and thus becoming an executor of his own wrong or by virtue of letters of administration granted to him in any one of the five manners known to law or by virtue of the fact that he is an executor named by the testator in the will, a person who actually administers the estate would be an executor for the purposes of s. 168 and under the provisions of s. 168, sub-s. (3), separate assessments have to be made under s. 168 on the total income of each completed previous year or part thereof as is included in the period from the date of the death to the date of complete distribution to the beneficiaries of the estate according to their several interests. The decisions of the courts in England and India on this point are very clear. We need only refer to three authorities in this connection. They are: (1) Lord Sudeley v. Attorney-General  AC 11; 1 EDC 73 (HL), (2) King v. Commissioners for the Special Purposes of the Income Tax Acts (Ex parte Dr. Barnardo's Homes National Incorporated Association)  7 TC 646 and (3) Administrator-General of West Bengal v. CIT : 56ITR34(SC) .
11. In Lord Sudeley's case  AC 11, the question was of probate duty regarding foreign mortgages, that is, mortgages over property situated in New Zealand. The facts were that the testator, who died domiciled in England, by his will after bequeathing legacies, gave the residue of his real and personal estate to his executors in trust for his wife for life and by a codicil gave one-fourth of his 'said residuary real and personal estate' to his wife absolutely. His will was proved in England by his executors domiciled in England. His estate included mortgages on real property in New Zealand. His wife afterwards died and her will was proved in England. At her death her husband's estate had not been fully administered, the clear residue had not been ascertained, and no appropriation had been made of the New Zealand mortgages or of any securities to particular shares of the ultimate residue. It was held by the House of Lords that the right of the wife's executors was, not to one-fourth or any part of the mortgages in specie, but to require her husband's executors to administer his personal estate and to receive from them one-fourth part of the clear residue, that this was an English asset of the wife's estate and that probate duty was, therefore, payable under her will upon one-fourth part of the value of the New Zealand mortgages. This decision on the basis of the residuary legatee being entitled only to the property and that too only when the property is fully administered was followed in Dr. Barnardo's Homes'case  7 TC 646(HL) and the earlier decision in Lord Sudeley's case  AC 11; 1 EDC 73(HL) was explained by Viscount Finlay as follows at page 668 of the report:
'It was pointed out in that case that the legatee of a share in residue has no interest in any of the property of the testator until the residue has been ascertained. His right is to have the estate properly administered and applied for his benefit when the administration is complete.'
12. and it was pointed out that until the administration was complete, it was the executors and not the residuary legatees who were the recipients of the income and there was no relation back in the case of the bequest of a residue.
13. The decisions in Lord Sudeley's case  AC 11; 1 EDC 73 (HL) and Dr. Barnardo's Homes' case  7 TC 646(HL) were followed in the case before the Supreme Court in Administrator -General of West Bengal v. CIT : 56ITR34(SC) . The facts were that under the will of the testator, who died in July, 1938, the residuary estate was bequeathed to his five sons. The executors and trustees were required to manage the estate for a period of 15 years before the end of which numerous specific legacies were to be paid out of the savings from the income of the estate. They were not competent to sell any portion of the corpus of the estate for this purpose. On August 24, 1938, the sons obtained probate of the will but on May 10, 1948, the Administrator-General of West Bengal was appointed administrator and letters of administration de bonis non of the estate were granted to him. In the relevant accounting periods, the administration of the estate was not complete, and the question was whether the income from the estate was specifically receivable on behalf of the sons, who were the residuary beneficiaries and it was held that as the administration of the estate was not completed, the Administrator-General received the income of the estate on his own behalf and not on behalf of the sons who were residuary beneficiaries, and following the English decisions which we have referred to above, it was held by the Supreme Court that a share of the residue does not belong to the beneficiary until it is ascertained either in whole or in part by transfer or assent to him or by appropriation.
14. The learned Advocate-General appearing on behalf of the assessee has very strongly relied upon these three decisions and contended that until the share of the residue coming to the assessee in the instant case was ascertained either in whole or in part by transfer or assent to him or by appropriation, the income must be charged in the hands of Sakarlal Balabhai as the legal representative of Balabhai Damodardas as has been found by the Tribunal in the instant case. In our opinion, it is not necessary to refer to the numerous cases which have been cited before us because the point involved is a very simple one. The question is, whether that the relevant time, that is, the period relevant for the assessment years 1963-64 to 1967-68, it could be said that the share of the assessee in the residuary estate, and in this connection it must be noted that it was the self-acquired property of the deceased, Balabhai, which constituted the residuary estate as found by the Division Bench in the earlier wealth-tax case, the ascertainment of that share had taken place. In this connection, in our opinion, we can do no better than refer to the decision of Viswanatha Sastri J. in V. M. Raghavalu Naidu and Sons v. CIT : 18ITR787(Mad) . Quoting from the decision of the House of Lords in IRC v. Wahl  17 TC 744, 759(HL), (at page 807 of 18 ITR) it was pointed out:
''Since the case of Barnardo's Homes  7 TC 646(HL), it has been clearly established that the accumulation of income arising from a residuary estate before the appropriation of that estate to the residuary legatees, does not cause such income to be regarded as the income of the beneficiary on its ultimate receipt by him and, therefore, where, as in that case, the beneficiary was a charitable institution, they are not entitled to a return of the sums which have been deducted by way of tax from the income at its source.''
At page 807, Viswanatha Sastri J. observed:
'The residuary legatee might be interested in the estate subject to the payment of debts and legacies, but he did not become the proprietor or owner of the residue except when a residue had been ascertained which, on completion of administration, is made over to him by the executors. The question in each case is, has the administration reached a point at which you can infer that the administration has been completed, the residuary estate has been ascertained, the bequest of the residue has been assented to and the residuary estate therefore became vested in trustees, be they the executors themselves or strangers In other words, can it be said that the residuary estate had taken concrete shape and could and should have been handed over by the executors to the persons beneficially entitled but for the fact that the estate is settled in trust and vested in the executors as trustees ?'
15. We respectfully agree with this test evolved by Viswanatha Sastri in V. M. Raghavalu Naidu and Sons' case : 18ITR787(Mad) , because, in our opinion, it is only in the light of this test that one has to consider whether at least as regards the residuary estate the income in the hands of Sakarlal Balabhai could be said to be the income of the assessee himself so far as the years under assessment are concerned. The Division Bench in Navnitlal Sakarlal's case : 106ITR512(Guj) (the wealth-tax case) has pointed out that the assessee and his brother could be properly called residuary legatees because so far as the self-acquired property was concerned, it was to come to them after the earlier expenses referred to in the clause of the will had been paid out and necessary disbursements mentioned in the will had been made. As regards the undivided share in the joint family was concerned, it was obvious that the legatees under the will of Balabhai, namely, the present assessee and his brother, were entitled to an undivided specific share in each and every one of the properties of the coparcenary. Thus, it is obvious that a clear distinction has to be made as between the income from the joint family properties and the income from the self-acquired properties. So far as the self-acquired properties were concerned, the assessee and his brother were the residuary legatees and the question was, whether it could be said that the estate was fully administered or not at the relevant years under consideration. In this connection, it may be pointed out that the deceased died on December 31, 1957. The estate duty was ascertained on Dcember 30, 1961, and by March 31, 1963, nearly half or slightly more than half of the estate duty was already paid off. There are no other directions in the will in this case, a copy of which has been included in the paper book, pointing out that any other administration except the necessary disbursements immediately after death was required to be made by whosoever administered the estate. We are concerned with the assessment year 1963-64, that is, from the period commencing from April 1, 1963 onwards. The only payment that seems to have been left out was the payment of the estate duty. As pointed out by a Division Bench of this High Court in CIT v. Mrs. Indumati Ratanlal : 70ITR353(Guj) and by a Division Bench of the Andhra Pradesh High Court in CED v. Estate of Late Omprakash Bajaj : 110ITR263(AP) , the liability for the payment of estate duty is the personal liability of the accountable person and it is limited in extent to the assets of the deceased actually or constructively received by him; qualitatively it is a personal liability and not a liability payable only out of the assets of the deceased. The assets of the deceased actually or constructively received, merely constitute the limit of the liability of the accountable person. Under these circumstances, it is obvious that by the commencement of the period under consideration, namely, assessment year 1963-64 to assessment year 1967-68, the only thing that was left to be done was the payment of the estate duty and for that payment the liability was not that of the estate of the deceased which was likely to be taken into consideration under the administration of the estate but was the personal liability of the assessee and his brother and, secondly, that liability was limited to the estate of the deceased actually or constructively received by them. Under these circumstances, the only conclusion that could be drawn is that by the commencement of the period that is under consideration before us, the residuary estate must be deemed to have been ascertained and the residuary estate must be said to have taken concrete shape and should have been handed over by Sakarlal, the father of the assessee, and that the administration had reached such a point that one can infer that the administration had been completed and the residuary estate had been ascertained or was capable or easily capable of being ascertained.
16. The learned Advocate-General has drawn our attention to the frame of the question which implies that the actual administration of the estate of Balabhai Damodardas was going on during the period under consideration because the wording of the question is, 'when the estate was being administered by Shri Sakarlal Balabhai'. He also drew our attention to para. 21 and several other portions of the order of the Tribunal. In para. 21, it has been pointed out that it was an admitted fact that Shri Sakarlal Balabhai had taken possession of the estate and was administering it. In para. 20 of the order of the Tribunal, the contention of the revenue that since at the close of the assessment year 1964-65 only some estate duty liability remained to be discharged the administration of the estate was complete and the estate should be held to have been distributed at that point of time, was rejected because, according to the Tribunal, in view of the clear language of s. 168(3), the executor was assessable till complete distribution of the estate and when as a matter of fact there was no such distribution, there could be no question of assessability of the residuary legatees as the residuary legatees had no interest in the estate until its complete distribution. This conclusion of the Tribunal is due to a mixing up of two concepts. One is the concept under the general law and the other is the concept under s. 168(3) of the I.T. Act. The fact that the executor, that is, the person who is actuanly administering the estate of the deceased person, continues to be liable until the distribution takes place is one concept whereas the concept that the residuary legatee is not liable until the administration is complete is another concept altogether. The fact that the administrator continues to be liable or the executor continues to be liable for the income-tax liabilities of the estate of the deceased under s. 168(3) does not mean that the administration is not complete or, to use the words of Viswanatha Sastri J., 'the administration had not reached such a point that it could be inferred that the administration had been completed and the residuary estate had been ascertained and the residuary estate could have been and should have been handed over' by Sakarlal Balabhai to the assessee and his brother. In view of the clear exposition of law regarding the liability under the E.D. Act, it is obvious that by the commencement of the period under consideration that estate could and should have been handed over by Sakarlal Balabhai to the assessee and his brother. Under these circumstances, the principle arising under the general law regarding the ascertainment of residuary estate must be dealt with separately and by itself, that is, apart from the provisions of s. 168(3) of the I.T. Act.
17. Under these circumstances, we hold that by the time the assessment years under consideration started, the residuary estate had been ascertained and was capable of being handed over to the assessee. Since that is the conclusion, it must be held that in spite of the provisions of s. 168(3) of the I.T. Act which provides for the liability of the administrator, it was open to the I.T. authorities to proceed against the assessee before us as regards his share of the income from the estate of Balabhai Damodardas, the deceased testator. No other conclusion is possible on the facts of this case and it is not merely an inference of fact as to whether the estate was completely administered or not or should be deemed to have been completely administered in the eye of law; it is an inference in law based on facts and under these circumstances we are accepting the facts as found by the Tribunal but come to our own conclusion as to whether in the eye of law the estate could be said to have been fully administered.
18. Under these circumstances, we answer the question referred to us in the negative, that is, in favour of the revenue and against the assessee. The assessee will pay the costs of this reference to the Commissioner.