K.P. NARAYANAN Vs. CIT

JUDGEMENT

(1.) THE question referred to us by the Income Tax Appellate Tribunal,Cochin Bench is in these terms: "Whether,on the facts and in the circumstances of the case,the assessment of the income of the estate of late Sri.P.K.Raman in the hands of Sri.K.P.Narayanan has to be made under S.41 of the Indian Income Tax Act,1922? "

(2.) THE facts and circumstances of the case are that one Sri.P.K.Raman who was ordinarily resident in Ceylon and who was doing business in Colombo had executed a will dated 21 -6 -1945(Annexure A)bequeathing large estates and properties owned by the said Raman.Mundan,the brother of Raman was appointed executor under the will.Raman died on 8 -6 -1948.Till and up to the assessment year 1954 -55,the assessments were made on Mundan in his capacity as the executor of the estate of late P.K.Raman.Though on the basis of a return filed by Mundan for the assessment year 1955 -56,an assessment had been made,that assessment was set aside the matter having been reopened under S.34 of the Indian Income Tax Act,1922(hereinafter referred to as the Act ).Mundan in the meantime died and one K.P.Narayanan,another brother of the deceased was appointed by the Court to which Mundan had applied for a probate,as administrator.Notice was issued to the said Narayanan and since there was no response an assessment was made for the year 1955 -56 under S.23(4)of the Act.The same procedure was followed for the year 1956 -57.The assessee filed appeals and contended that a compromise had been entered into when the proceedings for probate was pending before the District Court,Colombo and that thereafter the position of the executor Mundan was that of a trustee and hence it was urged that the legatees were to be assessed under S.41 of the Act.The other points raised in the appeals are not relevant for this reference.The appeals were rejected by the Appellate Assistant Commissioner by order Annexure D.There were further appeals before the Tribunal and those appeals also have been dismissed.

(3.) WHEN Mundan applied for probate of the will,Annexure A,one Achikannu and her daughter Devaunie objected contesting the genuineness of the will.The said Achikannu also applied for letters of administration on the ground that she was the widow of the deceased P.K.Raman and that her daughter Devaunie was the daughter of Raman through her.It was these claims put forward by Achikannu on her own behalf and on behalf of her daughter Devaunie that were settled by compromise Annexure B.Provision was made in Para.18 of Annexure B that "Petitioner(Mundan who applied for the probate)and the said Legatees under the said Last Will personally do pay to the said 7th and 8th Respondents Achikannu and Devaunie a sum of Rupees Three Lakhs and forty thousand(Rs.340,000/ -)as follows....." ;. We may extract Para.9 of the compromise. "9(a ).It is further ordered and decreed of consent that the properties referred to in the clause numbered(2)in the said Last Will and Testament to wit premises No.26 Hill Street in Colombo and an extent of forty five(45)acres from and out of the said Estate called and known as "Bandiruppuwa Estate "and the properties referred to in the clause numbered(5)in the said Last Will and Testament to wit all cash in Banks and cash in hand at the time of the testator P.K.Raman's death his jewellery and ornaments and all his business and their establishments and assets belong absolutely to and are the property of(1)Devannie(2)Devanayaki(3)Ammaravathie and(4)Seelavathi all daughters of P.K.Sangaram in equal shares. (b)It is further ordered and decreed and it is hereby declared of consent that the properties mentioned in the clause numbered eight(8)in the said Last Will and Testament belonging to and are the property of(1)Devannie(2)Devanayaki(3)Ammaravathie(4)Seelavathi all daughters of P.K.Sangaram(5)Ammu(6)Karthiaini and(7)Meenachchi all daughters of P.K.Mundan in equal shares." The only other paragraph of the compromise which is relevant is Para.14 which is in these terms: "14.It is further ordered and decreed of consent that the petitioner P.K.Mundan or his attorney or duly authorised agent be forthwith placed in possession of the entire estate and properties of the deceased P.K.Raman save and except the premises No.81 Hill Street in Colombo and the forty(40)acres and the twenty(20)acres out of the Bandiruppuwa Estate."