# ADMINISfRA TOR-GENERAL OF WEST BENGAL v. COMMISSIONER OF INCOME-TAX, CALCUITA

- **Citation:** [1965] 1 S.C.R. 650
- **Court:** Supreme Court of India
- **Decided:** 1964-10-06
- **Bench:** K. SuBBA RAo, J. C. Shah Ands. M .. Sikri
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/adminisfra-tor-general-of-west-bengal-v-commissioner-of-income-tax-calcuita-3370
- **Pages:** 10

## Headnote

Indian Jnco1ne·tn:c Acr, 1922, s. 41-Adniinistrator-General appoint~
1d ad1nini.straror de boois non of property paising under will-Residue of
property to go to testator's sons after paymenl of varfr,i4S legac;es-Adtnlnlstrator-General whether receives income of estate on behalf of the testaJ<ff1
sons during period of admi11is1rarion-Wliether asJeS.table under s. 41 ..
T died in 1938. According to his will certain legacies were to be paid
out of his estate during a period of fifteen years after his death, the eswe
being managed by executors and trustees during that period; and the residue
thereafter was to go to his five sons.
Prob~ite \\'as g1anted to the five sons
on August 24, 1938, but by an Order da.ed !>lay 10, 1948, the High
Court appointed the Administrator-General of West Bengal ., Administrator de bonis non of the property.
In inccmc-lax proceedings relating to
the assessment years 1950-51 and 1951-52 the Administra1or-Generalappellant herein----claimed th<il assessment should be made under s. 41 of
the Indian Income-tax Act, 1922, because the income cf the estate was
receivable by him on behalf or the live sons of the testator. their sharK
in the said income hcing definite and deterrninalc.
His claim was rejectal
by the assessing and appellate authorities. The High Court held that the
Administrator-Gener.I when appointed by the Court was expressly covered
by s. 41 as one o( the persons to whom that section applied, hut the
shares of the sons not being determinate as long as the administration lasted,
the proviso to s. 41 ( 1) was attracted, and tax was recoverable at the
maximum rate. Appeal was filed by the Administrator-General before the
Supreme Court. with a certificate under •· 66A(2) o( the Act.
The appellant urged that the High Coun had wrongly held that the
shares of the five sons were not determinate.
On behalf of the Revenue
it was contended that s. 41 did not apply at all because the appellant received
the income not on behalf of the five sons but as an executor.
HELD : The fact that the Administrator-General was mentioned io s. 41
did not conclude the matter. There was another condition to be fullllled
before that section could apply, namely, that the income had te>
be
received hy him on behalf of a per~on or person~. Jn the insta11t case the
Administralor-Gcneral did not receive the income on behalf of the five sons.
What the five sons "-'ere cntit1ed to was the rcsid'ue of the estate, and any
savings that might be out of the income o( the eslatc would be received by
them finally not as their income but as a part of rhe residue. The position
of an Administrator-General appointed de bonis non was in no way different
from that of an executor vis-a-vis the income he received from the
estate. [656 A-8; 659 B-CJ.
Y. M. Raghavalu Naidu v. Commissioner of Income-tax and Exeest
Profilf Tax, Madras, 18 I.T.R. 787, R. v. Income-tax Special Commlssionu>,
7 TC. 646, Lord Sude/ey v. Attorney-Genera/, [1897] A.C. l I. Marla
Celeste Samaritan Society of the London Hospital v_ Commissitmer of
Inland Revenue, 11 .T.C. 226 and Corbett v. Commissioner of Inland Reve11116, 21 T.C. 449, relied on.
•
c
D
E
F
G
H
ADMINISTRATOR-GENERAL V. C.I.T. (Sikrf J.) .
651
A
Asit Kumar Ghose v. Commissioner of Agricultural Income-tax, We.tt
Bengal, 22 I.T.R. 177 and Birendra Kumar Dutta v. C.I.T. Calcutta, (1961)
42 I.T.R. 661 referredto.
In re Cunliffe-Owen Mountain v. Inland Revenue Commissioner, (15153)
I Ch. 545, distinguished.

## Text

650
ADMINISfRA TOR-GENERAL OF WEST BENGAL
v.
COMMISSIONER OF INCOME-TAX, CALCUITA
October 6, 1964
(K. SuBBA RAo, J. C. SHAH ANDS. M .. SIKRI JJ.)
Indian Jnco1ne·tn:c Acr, 1922, s. 41-Adniinistrator-General appoint~
1d ad1nini.straror de boois non of property paising under will-Residue of
property to go to testator's sons after paymenl of varfr,i4S legac;es-Adtnlnlstrator-General whether receives income of estate on behalf of the testaJ<ff1
sons during period of admi11is1rarion-Wliether asJeS.table under s. 41 ..
T died in 1938. According to his will certain legacies were to be paid
out of his estate during a period of fifteen years after his death, the eswe
being managed by executors and trustees during that period; and the residue
thereafter was to go to his five sons.
Prob~ite \\'as g1anted to the five sons
on August 24, 1938, but by an Order da.ed !>lay 10, 1948, the High
Court appointed the Administrator-General of West Bengal ., Administrator de bonis non of the property.
In inccmc-lax proceedings relating to
the assessment years 1950-51 and 1951-52 the Administra1or-Generalappellant herein----claimed th<il assessment should be made under s. 41 of
the Indian Income-tax Act, 1922, because the income cf the estate was
receivable by him on behalf or the live sons of the testator. their sharK
in the said income hcing definite and deterrninalc.
His claim was rejectal
by the assessing and appellate authorities. The High Court held that the
Administrator-Gener.I when appointed by the Court was expressly covered
by s. 41 as one o( the persons to whom that section applied, hut the
shares of the sons not being determinate as long as the administration lasted,
the proviso to s. 41 ( 1) was attracted, and tax was recoverable at the
maximum rate. Appeal was filed by the Administrator-General before the
Supreme Court. with a certificate under •· 66A(2) o( the Act.
The appellant urged that the High Coun had wrongly held that the
shares of the five sons were not determinate.
On behalf of the Revenue
it was contended that s. 41 did not apply at all because the appellant received
the income not on behalf of the five sons but as an executor.
HELD : The fact that the Administrator-General was mentioned io s. 41
did not conclude the matter. There was another condition to be fullllled
before that section could apply, namely, that the income had te>
be
received hy him on behalf of a per~on or person~. Jn the insta11t case the
Administralor-Gcneral did not receive the income on behalf of the five sons.
What the five sons "-'ere cntit1ed to was the rcsid'ue of the estate, and any
savings that might be out of the income o( the eslatc would be received by
them finally not as their income but as a part of rhe residue. The position
of an Administrator-General appointed de bonis non was in no way different
from that of an executor vis-a-vis the income he received from the
estate. [656 A-8; 659 B-CJ.
Y. M. Raghavalu Naidu v. Commissioner of Income-tax and Exeest
Profilf Tax, Madras, 18 I.T.R. 787, R. v. Income-tax Special Commlssionu>,
7 TC. 646, Lord Sude/ey v. Attorney-Genera/, [1897] A.C. l I. Marla
Celeste Samaritan Society of the London Hospital v_ Commissitmer of
Inland Revenue, 11 .T.C. 226 and Corbett v. Commissioner of Inland Reve11116, 21 T.C. 449, relied on.
•
c
D
E
F
G
H
ADMINISTRATOR-GENERAL V. C.I.T. (Sikrf J.) .
651
A
Asit Kumar Ghose v. Commissioner of Agricultural Income-tax, We.tt
Bengal, 22 I.T.R. 177 and Birendra Kumar Dutta v. C.I.T. Calcutta, (1961)
42 I.T.R. 661 referredto.
In re Cunliffe-Owen Mountain v. Inland Revenue Commissioner, (15153)
I Ch. 545, distinguished.
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 168B
169 of. 1964.
Appeals from the judgment and order dated December 5,
1961, of the Calcutta High Court in Income-tax Reference No.
116 of 1957.
A. V. Viswanatha Sastri, K. Rajendra Chaudhuri, M. RajaC
gopal and K. R. Chaudhuri, for the appellant (in C.A. No. 168
of 1964).
K. Rajendra Chaudhuri and K. R. Chaudhuri, for the appellant (in C.A. No. 169 of 1964).
C. K. Daphtary, Attorney-General, R. Ganapathy Iyer, R. H.
D
Dhebar and R. N. Sachthey, for the respondent (in C.A. Nos.
168-169 of 1964).
The Judgment of the Court was delivered by
Sikri J. These are two appeals by certificates under s. 66A(2)
of the Indian Income Tax Act, 1922, against the judgment of
E
the High Court at Calcutta, answering two questions referred
to it by the Income-tax Appellate Tribunal against the appellant.
The two questions are :
F
G
1. Whether on the facts and in the circumstances
of the case, the assessments on the Administrator--
General of West Bengal as an individual and not as
representing
the
shares of the various beneficiaries
under the Will of the late Raja P. N. Tagore separately
was in accordance with law ?
2. If the answer to Question No. 1 be in the affirmative, then whether on the facts and in the circumstances of the case, the assessment of the said Administrator-General at the maximum rate was legal ?
The facts and circumstances referred to are set out in the
statement of the
case by the Appellate Tribunal and are as
follows.
One Raja Profulla Nath Tagore died on July 2, 1938,
leaving an elaborate will dated March 14, 1927, by which certain
H
legacies were left to specified persons and institutions,. the residue
being given to five sons.
The residue was disposed of thus by
clause 81 of the Will :
652
SUPREME
COURT
REPORTS
[1965] I S.C.R.
"Save and except the legacies that I have provided
for in this my present Will and save my garden house
at Allambazar Tagore Villa together with articles of
furniture I give to my sons all my remaining moveable
and immoveable properties that will be left and also
the moveable and immoveable properties whereto my
right will accrue in future.
Subject to the management and payment of these several trusts (Debutter
etc.) and the legacies that I have created or I have
directed the creation thereof in this Will my sons shall
continue to hold and enjoy all the said moveable and
immoveable properties."
Clause 10 of the said Will provided for the payment of the
legacies thus :
"The legacies fixed in this my present Will shall
have to be paid in· full within 15 years of my death
and these 15 years my Estate shall be managed under
the supervision of my Executors and Trustees.
A! to
the various legacies that I have made a mention of in
this my Will, my Executors and Trustees shall pay up
all the said legacies out of the small savings made from
the income of my Estate year after year. ·For paying
up the legacies my Executors and Trustees shall not
be competent to sell ·any portion of my Estate or any
immoveable property.
As to what F have arranged
to pay to the different parties, in this my present Will,
my Executors an? Trustees shall not pay any interest
on those legacies nor shall the legatees be competent
to claim any interest."
It is not necessary to set out the other clause~ of the Will,
but we may mention that there were numerous legacies which
had to be paid before the residue could be ascertained.
Probate of the Will was granted to the said five sons on August
A
B
c
D
E
F
24, 1938, but by an order dated May 10, 1948, the High Court
G
appointed the Administrator-General of West Bengal as Administrator and ordered that letters of administration de bnnis non
of the property and credit~ of the deceased (Raja Profulla Nath
Tagore) with a copy of the Will annexed thereto be granted and
issued out.
The Administrator-General of West Bengal, hereinafter referH
red to as the Appellant, submitted returns
in respect of tho
Assessment years 1950-51 and 1951-52, the accounting yean
ADMINISTRATOR-GENERAL V. C.I.T. (Sikri J.)
653
A being 1949-50 (1356 B.S.) and 1950-51 (1357 B.S.), showing
income of Rs. 33,611 for the first year and Rs.
39,630 for
the second year.
He claimed that the income was specifically
receivable on behalf of the said five sons of the deceased, and
their shares in the said income were definite and determinate.
The Income-tax Officer rejected the claim for the Assessment
B year 1950-51 on the ground that "the Administrator-General of
West Bengal is only an executor of the estate of Raja P. N.
Tagore and that the execution is not yet complete.
Under the
circumstances the question of the beneficiaries does not arise and
the Administrator-General himself is assessable as Executor to
estate P. N. Tagore." He passed a similar order in respect of
C Assessment year 1951-52.
The Appellate Assistant Commissioner upheld the orders of the Income Tax Officer.
Following
the principles laid down in the decisions . in V. M. Raghavalu
Naidu v. Commissioner of. income Tax and Excess Profits Tax,
Madras(') and Asit Kumar Ghose v. Commissioner of Agricultural
D Income-Tax, West Bengai( 2 ), he held that the "levy of tax on the
separate individual incomes of the beneficiaries can be made only
when the administration of the estate has been completed, and
the residue of the estate has been a·scertained." It was conceded
before him that the administration of the estate was not completed till the end of the.accounting year (1950-51). The AppelE late Tribunal also rejected the contention. It held that :
F
G
H
"It is the condition of the application of this section
(s. 41) that the Administrator-General of West Bengal
shall receive the income on behalf of the beneficiaries.
We have held that having regard to Section 211 of the
Indian Succession Act the Administrator-General of
West Bengal receives it as legal representative of the
deceased person and not on behalf of the beneficiaries.
The latter he can do only if the administration of the
estate is complete or if there are specific directions to
that effect.
The proviso goes further and enacts that
when
such' income is not specifically receivable on
behalf of one person or where the individual share of
the person on whose behalf it was receivable is indeterminate or unknown, tax shall be levied and .recoverable in the maximum rate.
There is no doubt in this
case that the Administrator-General of West Bengal is
not receiving the income specifically on behalf of any
beneficiary.
Further there are certain
benefactions
(1) (1950) 18 I.T.R. 787.
(2) (1952) 22 I.T.R. 177
654
SUPREME
COURT
REPORTS
[ 1965) 1 S.C.R.
and payment in their very nature involving the ~hare
income of the beneficiaries
being indeterminate or
unknown.
So truly speaking the tax must be levied in
the maximum rate.
But the assessee is not entitled
to claim that the income of the beneficiaries must be
separately assessed and not together in the hands of
the Administrator-General of West Bengal."
Then the Appellate Tribunal,
on the application
of the
Appellant, referred the two questions reproduced above.
The
High Court held that "the Administrator-General when appointed
by 1he Court is expressly covered by the section ( s. 41 ) and
A
B
it cannot be said that because he has the powers of an executor
C
he must be treated differently."
It ful1her held that "the income
from the properties did not so long as administration WM incomplete become theirs.
It cannot, therefore,
be said of the
sons that they had any determinate share in the profits or gains
of the estate or any part thereof in the accounting years.
The
proviso to s. 41 ( 1 ) is, therefore, attracted on the facts of this
D
case, malting the tax recoverable at the maximum rate."
The learned counsel for the appellant in Civil Appeal 168
of 1964, Mr. Viswanatha Sastri, has urged that the High Court
was wrong in holding that the shares of the five sons were indeterminate.
He said that their shares were I/ 5th each, and
E
what has to be seen is whether the shares are determinate and not
whether the actual sum, which each son would get is variable or
not.
Income may be variable but the shares of the sons are
fixed.
In this connection, he relied ori the decision in Birendra
Kumar Datta v. Commissioner of Income tax, Calcutta(').
He
further said that s. 41 was mandatory and if the proviso to s. 41
F
did not apply, the Income-tax Officer was bound tp assess the
appellant under s. 41.
The learned Attorney-General, on behalf of the Revenue, submitted that s. 41 did not apply at all because in the facts and
circumstances of the case, the appellant
did not receivo the G
income on behalf of the five sons but received it like an executor.
He said that an executor was not mentioned in s. 41 and was
assessable under ss. 3 & 4 of the Act.
In the alternative, he
argued that the share of the sons were indeterminate.
As we
are inclined to accept the first submission of the learned AttorneyGeneral, we need not express any opinion on the question whether
H
(I) (1961) 42 l.T.R. 661.
ADMINISTRATOR-GENERAL V. C.I.T. (Sikri J.)
655
A the shares of the five sons were indeterminate or not, within the
proviso to s. 41.
Section 41 reads thus:
"41. Court bf Wards,
etc. (l) In the case of
income, profits or gains chargeable under
this
Act
which the Courts of Wards, the Administrators-General,
B
the Official Trustees or any receiver or manager
(including any person whatever his designation who in
fact manages property on behalf of another) appointed
by or under any order of a Court, or apy trustee or
trustees appointed under a trust declared
by a duly
executed instrument in writing whether testamentary or
C
otherwise (including the trustee or trustees under any
Wakf deed which is valid under the Mussalman Wakf
Validating Act, 1913 (6 of 1913) are entitled to receive on behalf of any person, the tax shall be levied
upon and recoverable from such Court of Wards,
Administrator-General, Official. Trustee, receiver or
D
manager or trustee, or trustees, in the like manner and
to the same amount as it would be leviable upon and
recoverable from the person on whose behalf such income, profits or gaii:is are receivable, and all the provisions of this Act shall apply accordingly;
E
Provided that where any such income, profits or
gains or any part thereof are not specifically receivable on behalf of any one person, or where the individual shares of the persons on whose behalf they are
receivable are indeterminate or unknown, the tax shall
be levied and recoverable at the maximum rate but,
· F
where such persons have no other personal income
chargeable under this Act and none of them is an artificial judicial person, as if such income, profits or gains
or such part thereof were the total income of an association of persons : "
It is not disputed that before s. 41 can be applied, it must
G be found that the Administrator-General was entitled to receive
income on behalf of a person or persons.
It is common ground
that the administration of the estate was not completed within
the accounting periods in question.
So the question boils down
to this : Did the appellant receive the income on his behalf or
H on behalf of the five sons during this period ?
It seems to 111s that during the administration of the estate,
the appellant did not receive the income on behalf of the five
656
SUPREME
COURT
REPORTS
(1965] l S.C.R.
sons.
When he received the income, he had a discretion to
A
use it either for paying legacy A or legacy B or for meeting other
expenses.
If there was a saving in one year, next year he could
approririate it for paying legacy C or D or for meeting other
expenses.
What the five sons were entitled to was the residue
of the estate would be received by them finally,
not as their
income but as part of the residue.
B
In England, apart from statutory prov1s1ons,
a
residuary
beneficiary is not regarded as taxable on income of an estate in
the course of administration.
A share of residue does not belong to the beneficiary until it is ascertained either in whole or
part by transfer or assent to him or by appropriation (WheatC
croft on Law of Income Tax, Surtax and Profits Tax, section
1-1104).
The decision in R. v. Income Tax Special Commissioners(')
(Ex parte, Dr. Barnardo's Homes) supports the contention of the
learned Attorney-General. The facts may be taken from the headD
note.
"Mr. Denzil Thomson died on November 15, 1914, leaving the residue of his estate to Dr. Bamardo's Homes National
Incorporated Association.
The Testator's next-of-kin contested
the will and the proceedings were compromised by the Associa-·
tion making over to the next-of-kin one-third of the residuary
E
estate.
The proceedings delayed the division of the residuary
estate, and the investments constituting or representing the same
remained under the control of the Executors until May 1916,
between which date and December 1916, two-thirds of the investments were transferred to the association and one-third to the
Testator's next-of-kin.
The income arising from the investment!
F
was received under deduction of Income Tax and the total amount
of tax deducted from ·such income during the period between
the date of the Testator's death and the dates of transfer by the
Executors amounted to £ 498 Os. 11 d.
The Association applied
under Section 105 of the Income Tax Act, 1842, to the Special
Commisioners of Income Tax for repayment of two-thirds of that G
sum, viz., £ 332 Os. 7d., as being Income Tax on income payable to the Association and applicable. and in fact applied, by
it solely for charitable purposes.
The application being unsuccessful, the Secretary of the Association applied for and obtained a rule nisi caliing
upon the Special
Commissioner of
Income Tax to show cause why a writ of mandamus should not H
issue to them commanding them to allow exemption from Income
·---·---
(!) 1 r.c. 646.
A
B
c
D
E
F
G
H
ADMINISTRATOR-GENERAL V. C.l.T, (Sikri J.)
657
Tax on the income in question and to repay the sum of
£332 Os. 7d.
The House of Lords held, inter alia, following !he decision
in Lord Sudelev v. Attorney-General('), that "prior to the ascertainment of !he residue, the Association as residuary legatee had
no interest in the Testator's property, that the taxed income of
!he estate prior to such asce1iainment was income of !he Executors, and that it was not received by them as trustees on behalf
of the Association."
In the Court of Appeal the Master of Rolls observed that
'the income that they were receiving in the meantime was income
which they were receiving not on behalf of the residuary legatee
at aJI but on behalf of themselves as executors for application in
the administration of the estate.'
Viscount Finlay observed as foJiows :
"It appears to
me that the present case is really
decided by the decision of this House in Lord Sudelev's
case ( 1 ). It was pointed out in that case that the legatee
of a share in a residue has no interest in any of the
property of the testator until the residue has been ascertained.
His right is to· have the estate properly
administered and applied for his benefit when the administration is complete.
The income from which this
Income Tax was deducted was not the income of the
.charity.
It was the income of the executors.
They
were, of course, bound to apply it in due course of
administration, but they were not trustees of any part
of it for the charity.
There had been no creation of
a trust in favour of the charity in respect of this income,
it was never paid over to the charity as income. What
was ultimately paid over on the close of the administration was the share of the whole estate, consisting of
capital
and
accumulated income, which fell to the
charity.
The executors, not the charity, were the
recipients of this income, and there is no relation back
in the case of the bequest of a residue. If no right
of deduction at the source had existed it is the executors
and the executors only who could
have been made
liable for the tax."
"(i) iia9~>..d: 11.
65R
SUPREME
COURT
REPORTS
[1965] 1 S.C.R.
Viscoun~ Cave put the point thus :
"When the personal estate of a testator has been
fully administered by his executors and the net residue
ascertained, the residuary lega1ec is cntilled to have the
residue as so ascertained, with any accrued income,
transferred and paid to him; but until that time he ha!
no property in any specific inves1ment forming part of
the estate or in the income from any such investment,
and bo1h corpus and income are the property or the
executors, and are applicable by them as a mixed fund
for the purposes of adminislration.
This was fully explained in Lord Sudeley v. The Atrorney-Genera/
[L.R. [1897] A.C. 11]."
Subsequent cases such as the Maria Celeste Samaritan Society
of the London Hospital v.
The Commissioners of Inland
Revenue( 1 )
and Corbetr'.v. Commis.<ionas of In1and Revenue(') have taken the same view.
In lhe latter case, the decision in Dr. Barnardo's case was held to have laid down "a general proposition applicable to all cases of residue which is being
ascertained and which cannot be ascertained until 1he adminis1ration is complele."
Mr. Sastri relied.on Ill re Cw1/ifje-Owen Mountain v. Inland
H.el'mue Commissioners( 3 ), but, in our opinion, the Court of
Appeal has not taken any different view.
The Court of Appeal
was concerned with the interpretalion of s. 27 ( 1) of the Finance
Acl, 1949, whereby legacy
duty was not payable in certain
events.
It examined the nature of the title of a residuary lega!ee
A
B
c
D
E
and held that "!he title of a residuary lcgalce to a residuary
estate remains the same both before and after the completion of
F
the administration, notwithstanding that it is not until it is complete that he can say that any particular asset or any particular
income is his, and not merely part of the general estate of the
testator." It repelled the argument that pending final administration a residuary legatee has only an expectancy in the eye of
law.
But this conclusion does not lead to the next step that an
e~ecutor or administrator receive.~· the income on behalf of the
residuary legatee.
G
In V. M. Ragl1ava/u Naidu v. Commissioner of· Income-tax
and Excess Pro.fits Tax('). 1he Madras High Court held that
s. 41 of the Act had no application where the administration of H
the estate had not been completed by the executors.
(I) ti T.C. ~c6.
(2) 21 T.C. 449.
(3) (1953) t Ch. S.S.
(4) (1950) 18 l.T.R. 787.
ADMINISTRATOR-GENERAL V. C.I.T. (Sikri J.)
65~
A
The High Court in this case had repelled the argument on
behalf of the Revenue that the Administrator-General did not
come within the purview of s. 41 of the Act on the ground that
"the Administrator-General when appointed by the Court is expressly covered by the section and it cannot be said that because
he has the powers of an executor, he must be treated differently."
B
In our opinion, the· fact that the· Administrator-General is expressly mentioned in s. 41 does not conclude the matter.
The
section prescribes another condition and that is that the income
must be received by him on behalf of a person or persons. This
condition must be fulfilled before s. 41 becomes applicable.
The
position of an Administrator-General appointed de bonis non is
C in no way different from that of an executor vis-a-vis the income
he receives from the estate.
Accordingly, we hold that s. 41 of the Act is not applicable
in the present case as the appellant received the income c.in ~.
behalf and not on behalf of the five sons of the deceasecLR-li]a.
D In view of the above, the answers to the two questions set out in
the beginning of the judgment must be in the affirmative.
The
appeals are, therefore, dismissed with costs.
One set of hearing
fee.
Appeals dismissed.