COMMISSIONER OF INCOME TAX Vs. RAMSAY UNGER S

JUDGEMENT

(1.) THIS is a reference by the Income-tax Appellate Tribunal, Madras, under Section 66 (1) of the Indian Income-tax Act, 1922.

(2.) ONE Mr. Ramsay Unger (hereinafter called the assessee) was assessed to income-tax for the year 1942-43 on a total income of Rs. 70,766 in which was included a sum of Rs. 46,061 as income derived from the business of ice manufacture and cold storage carried on by him under the name of Ramsay and Co. He claimed before the Income-tax authorities a deduction of a sum of Rs. 22,108 as being interest paid to the estate of his father, the late John Ramsay Unger, on capital said to have been borrowed from the estate for the purposes of his business. The claim was disallowed except to the extent of only Rs. 1,984 on the ground that, in the circumstances hereinafter mentioned, the assessee had become the sole owner of the residuary estate subject to certain pecuniary legacies payable under his fathers will and that, therefore, except in regard to the aforesaid sum of Rs. 1,984 representing the interest payable to such legatees, the deduction claimed was in truth in respect of a payment to himself. The assessee appealed to the Income-tax Appellate Tribunal who considered that the administration of the testators estate had not been completed and the residue ascertained and that it was still in the hands of the assessee in his capacity as executor and had not become his property. The Tribunal accordingly allowed the appeal and directed the exclusion of the balance of Rs. 20,124 also from the assessment. Thereupon the Commissioner of Income-tax, Madras, applied to the Tribunal to state the case and refer it to this Court, claiming that a question of law arose out of its order, and the Tribunal, agreeing that a point of law was involved, referred to this Court for its decision the following question :-

(3.) RESIDUARY Estate. - One share of the residue to be paid or given to my son, Oscar Ramsay Unger (Captain, Indian Medical Service), or his heirs.