COMMISSIONER OF INCOME TAX Vs. RAMASWAMY IYENGAR V

JUDGEMENT

(1.) IN Commissioner of INcome-tax v. Reid, which was decided on the October 3, 1930, the Bombay High Court held that the INdian INcome-tax Act contained no provision under which the estate of a deceased person could be taxed. The definition of assessee under Section 2(2) of the Act only applied to a living person. IN Maharajadhiraj Of Darbhanga v. Commissioner of INcome-tax, Bihar and Orissa which related to an assessment made in the year 1929-30, the Privy Council held that Section 26(2) applied to a person who succeeded to the business of a deceased person and therefore the successor could be taxed in respect of the income obtained from the business in the year of succession. On the September 11, 1933, the Legislature inserted Section 24-B. Stated broadly, the question which arises here is whether Section 24-B overrides Section 26(2) and requires, in the case of a person dying leaving a business, the assessment to be made on his executor, administrator or other legal representative, as if he had not died.

(2.) THIS reference arises out of the assessment made on the Receivers of the estate of one RM. AR. AR. RM. Arunachalam Chettiar, who died on the February 23, 1938. He was survived by his two wives and the widow of a predeceased son. He left a will and therein appointed executors. The estate is now being administered by the Court of the Subordinate Judge of Devakottai, who appointed the Receivers. In Appeals Nos. 321 of 1940, and 3, 104 and 239 of 1941, this Court had to decide the rights of the widows and the sons widow. The deceased had large assets which included a money-lending business in British India with branches in Ceylon, the Federated Malay States and in French Cochin China. The decision of this Court, so far as it affects the present case, was that the deceaseds widows and the sons widow were entitled to the movable assets in British India, but that he sons widow did not share in the movable assets outside British India. The three ladies can be regarded as the successors to the deceaseds business, although not in equal shares.

(3.) REFERENCE answered accordingly.