COMMISSIONER OF INCOME TAX Vs. CONTRACTOR P P

JUDGEMENT

(1.) THE Income tax Appellate Tribunal ("the Tribunal" for short) has referred to us for our opinion the following questions under S. 256(1) of the IT Act, 1961 ("the Act" for short) :

(2.) THE facts leading to this reference, briefly stated, are as follows: The assessment years under reference are 1970 71 and 1971 72. The assessee, Pirojshah P. Contractor, since deceased was the son of one Pestanji Contractor. Pestanji Contrator died on August 16, 1941, leaving a will dt. June 4, 1941, and a codicil dt. July 23, 1941. Pestanji Contractor died leaving behind him his widow, Jerbai, three sons, namely, Pirojshah (the assessee), Manekshah and Nadirshah and three daughters, namely, Pirojbai, Dinbai and Gulbai. Jerbai and Pirojshah (the assessee) were appointed as executors and trustees under the will.

(3.) THE CIT passed an order under S. 263 of the Act holding that the entire income derived from the residuary property was liable to be taxed in the hands of the assessee and, therefore, the assessment order passed by the ITO for the assessment year 1970 71 to the extent that it taxed only half of the income from the residuary property in the hands of the assessee was prejudicial to the interests of the Revenue. He, therefore, directed the ITO to assess the whole of the said income in the hands of the assessee and revise the assessment accordingly. It may be mentioned here that, before the Commissioner passed the said order under S. 263 of the Act, the assessee preferred an appeal before the AAC challenging the addition of interest income of Rs. 77,968 representing interest earned on the compensation money which was invested with a bank in fixed deposit. However, it is not disputed that the CIT passed the order under S. 263 of the Act before the AAC took up the assessee's appeal for hearing. So far as asst. year 1971 72 is concerned, the ITO has held that the assessee was liable to be assessed in respect of the entire income derived from the residuary property and not half of the income, as held earlier.