R.K. Mittal vs Commissioner of Income Tax

In this reference relevant for the assessment year 1979-80, the following questions of law have been referred for our opinion:

Whether the existence of a named person as an executor in a will is statutorily required for the applicability of Section 168 of the Income Tax Act, 1961 (''Act'') ?

Whether under the facts and circumstances the provisions of Section 168 of Income Tax Act were not applicable in the present case ?

The father of the assessed left behind a will dated 7-1-1977 after he expired on 30-10-1977.

As per the will, the deceased had bequeathed a house property in favor of his wife, some shares and cash in favor of his two daughters and the residue was bequeathed in favor of the assessee.

The records of the case before us show that the distribution of assets could take place only subsequent to the assessment year that we are concerned with, that is, 1979-80. Until the assets were distributed, the assessed was administering the estate of the deceased for the purpose of execution of the will.

The assessing officer relied upon Section 168(1)(b) of the Income Tax Act, 1961 and assessed the income in the hands of the Association of person comprising of the assessee, his mother and two sisters. According to the assessee, the estate of the deceased ought to have been assessed in the hands of the assessed since he was administering the estate and was effectively executing the will of the deceased.

The Commissioner (Appeals) (''Commissioner (Appeals)'') accepted the contention urged by the assessed but that was reversed by the Income Tax Appellate Tribunal (Tribunal'') which restored the order of the assessing officer. Under these circumstances, the aforesaid two questions were referred for our opinion.

We have gone through the provisions of Section 168 and the Explanation which defines "executor" as including an administrator or other persons administering the estate of a deceased person. There is no doubt about the fact that the assessed was administering the estate of the deceased and Therefore he would be the executor of the will as per the Explanation to Section 168 of the Act. Since that is so, the provision of law that would be applicable would be Section 168(1)(a) of the Act and not Section 168(1)(b) of the Act.

Section 168(1) of the Act reads as under:

168 Executors.''(1) 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 one executor, then, as if the executor were an individual; or

(b) if there are more executors than one, then, as it the executors were an Association of person 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.

(2) to (4) xxxxxx

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

The view that we have taken is supported by two decisions cited before us by learned Counsel for the assessed in Commissioner of Income Tax, Gujarat -I Vs. Navnitlal Sakarlal, and Commissioner of Income Tax, Bombay City-II Vs. Usha D. Shah, .

It has been held that it is not necessary that an executor should be named in a will and the person who administers the estate of the deceased will be its executor in terms of the Explanation to Section 168 of the Act.

Under the circumstances, we answer the first question in the negative, that is, in favor of the assessed and against the revenue.

So far as the second question is concerned, we answer that question also in the negative, that is, in favor of the assessed and against the revenue making it clear that the provision of law applicable to the facts of the case would be Section 168(l)(a) of the Act.

The reference is disposed of accordingly.