# COMMISSIONER OF lNCOME TAX, MADHYA PRADESH, NAGPUR v. HUKAMCHAND MOHANLAL

- **Citation:** [1972] 1 S.C.R. 786
- **Court:** Supreme Court of India
- **Decided:** 1971-09-17
- **Case number:** Civil Appeal No. 2421 of 1968
- **Bench:** K. S. Hegde, A. N. Grover
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/commissioner-of-lncome-tax-madhya-pradesh-nagpur-v-hukamchand-mohanlal-5458
- **Pages:** 4

## Headnote

Jnco111e Tax Act, 1961, s. 41(1)- Assessee successor in business to
her deceased husband--..A111ount received by assessee by way of remission
of sales tax paid by h11sband-If liable to tax in the hands of the assessee
under s. 41 (I).
The assessee who \Vas successor-in-business to her deceased husband
A
B
was sought"to be taxed under s. 41(1) of the Income-tax Act, 1961, in
respect of certain amount received by her by way of remission from the
C
sales tax recovered from her husband.
On the question whether the
amount was assessable under s. 41(1) of the Act.
HELD : Section 41 (I) does not apply, because, the assessee who is
sought to be taxed is not the assessee contemplated by the section. ,.( the
husband of the assessee had been alive and had received the amount which
had been remitted during his life time he would certainly have been liable
to pay tax under the provisions of s. 41 (I). But the husband having died
D
the Revenue could not take any advantage of its provisions. The Act does
not contain any provision making a successor-in-business or the legal repre~
sentative of an assessec to whom an allowance has already been granted
liable to tax under s. 41 (1) in respect of the amount remitted and received
by the successor or the legal representative. [788 C-D, 789 A-Bl
C.l. T .. Bombay City v. Amarchand N. Slirofl, 40 l.T.R. 59 and C./. T.
Bombay v. James Anderson, 51 I.T.R. 345, referred to.
E

## Text

786
COMMISSIONER OF lNCOME TAX, MADHYA PRADESH,
NAGPUR
v.
HUKAMCHAND MOHANLAL
September 17, 1971
[K. S. HEGDE AND A. N. GROVER, JJ.J
Jnco111e Tax Act, 1961, s. 41(1)- Assessee successor in business to
her deceased husband--..A111ount received by assessee by way of remission
of sales tax paid by h11sband-If liable to tax in the hands of the assessee
under s. 41 (I).
The assessee who \Vas successor-in-business to her deceased husband
A
B
was sought"to be taxed under s. 41(1) of the Income-tax Act, 1961, in
respect of certain amount received by her by way of remission from the
C
sales tax recovered from her husband.
On the question whether the
amount was assessable under s. 41(1) of the Act.
HELD : Section 41 (I) does not apply, because, the assessee who is
sought to be taxed is not the assessee contemplated by the section. ,.( the
husband of the assessee had been alive and had received the amount which
had been remitted during his life time he would certainly have been liable
to pay tax under the provisions of s. 41 (I). But the husband having died
D
the Revenue could not take any advantage of its provisions. The Act does
not contain any provision making a successor-in-business or the legal repre~
sentative of an assessec to whom an allowance has already been granted
liable to tax under s. 41 (1) in respect of the amount remitted and received
by the successor or the legal representative. [788 C-D, 789 A-Bl
C.l. T .. Bombay City v. Amarchand N. Slirofl, 40 l.T.R. 59 and C./. T.
Bombay v. James Anderson, 51 I.T.R. 345, referred to.
E
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2421 of
1968.
Appeai'from the judgment and order dated January 31, 1967
of the Madhya Pradesh High Court in Misc. Civil Case No. 88 of
1966.
F
R. N. Sachthey and B. D. Sharma, for the appella,nt.
Rameshwar Nath and Swaranjit Sondhi, for the respondent.
The Judgment of the Court was delivered by
Grover, J. This is an appeal by certificate from a judgment of
the Madhya Pradesh High Court in an Income tax Reference. The
Reference related to the assessment made on the assessee for the
year 1962-63 for which the accounting period was the year ending
March 3 l, 1962.
The assessee carried on business as sole selling agent · of M/s. Mohanlal Hargovindas,
Jabalpur.
The
assessee succeeded to this business on the death of her husband on
or about February 17, 1960.
It would appear that M/s. Mohanlal Hargovindas had recovered a certain amount towards sales-tax
from the assessee's husband relating to the period January 26.
G
H
A
B
c
D
E
F
G
C.I.T. v. HUKAMCJ.iAND (Grover, J.)
787
1950 to March 31, 1951.
In an appeal filed oy the said firm,
however, the Assistant Commissioner of Sales Tax remitted the
sum of Rs. 24,341/- so recovered by the firm by an order dated
November 31, 1960.
Consequently M/s. Mohanlal Hargovindas refunded that amount to the assessee by means of a draft dated
October 31,
1961.
This draft was received by the assessee on
November 9, 1961 which fell in the accounting period.
The Income tax Officer sought to tax this amount under the provisions of
s. 41 ( 1) of the Income tax Act 1961, hereinafter called the ~Act'.
He did not accede to the contention of the assessee that the
income, if at all, was the i;ncome of the assessee's deceased husband and not her income.
The Appellate Assistant Commissioner
dismissed the appeal filed by the assessee.
The Tribunal acceded
to the contention of the assessee that since the allowance or de·
duction in question had been obtained by a different assessee,
namely, her husband she was not liable to pay tax on that amount
under s. 41(1) of the Act.
The Tribunal was moved by the Commissioner of Income tax for stating a case and referring the following question to the High Court :
"Whether the sum of Rs. 24,341 was liable to tax
under s. 41(1) of the Income tax Act, 1961 ?"
The High Court answered the question in favour of the assessee.
Section 41(1) is in t_he following terms:-
"41(1) Where an allowance or deduction has beerr
made in the assessment for any year in respect of loss,
expenditure or trading liability incurred by the assessee,
and subsequently during any previous year the assessee
has obtained, whether in cash or in any other manner
whatsoever, any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, the
amount ob~ined by him or the value of benefit accruing to him, shall be deemed to be profits and gains ·of
business or profession and· accordingly chargeable to
income tax as the income of that previous year, whether
the business or profession in respect of which the allowance or deduction has been made is in existence in that
year or not".
As pointed out by the High Court under the general law if a trading liability has been allowed as a business expenditure and if
this liability is remitted in any subse.quent year the amount remitted cahnot be taxed as income of the year of the remission nor
H
can the account for the year in which the liability was allowed be
reopened or adjusted.
Section 41(1) was enacted to supersede
this principlo but this section can apply only to tho assosseo. In
788
SUPREME COURT REPORTS
[1972] l S.C.R.
A
the present case if the husband of the assessee had been alive and
had received the amount which had bjeen remitted during his life- -
time he would certainly have been liable to pay tax under the
provisions of s. 41(1).
But .ll:anhaiyalal having died and his
\'VidoW being the assessee she cannot possibly be brought within
tlie section.
Section 2(7) of the Act defines lhe wotd "assessee".
The definition is very general and assessee is s~ated to mean a
B
person by whom income tax or super tax or any other sum of
money is payable un<t~r the· Act and includes every person as
mentioned in clauses (a), (b) and (c).
The assessee, in the present case, does not fall within any of those clauses.
There is no
specific provision in the Act under which it can be said that the
assessee is a person by whom income tax is payable on tihe amount c
of Rs. 24,341/• which came tel !ier by way of remission on account
of what had transpired ill the lifetime of her husband.
The Act
does not contain any provision making a successor in business or
the legal representative of an assessee to whom an allowance has
already been granted liable to tax Ul)der s. 41(1) in respect of
the amount remitted and received by the successor or the legal
representative.
The only provision which relates to the liability
D
of the legal representative is s. )59 of the Act.
Sub-section (I)
thereof provides that where a person dies his legal representative
shall be liable tb pay any sum which the deceased would have
been liable to pay if he had not died in the like manner and to
the same extefit as the deceased. The corresponding provision in
the Jficome tax Act 1922 was s. 24B. In Commissioner of Income tax Bombay v. Amarchand N. Shroff(') it was laid down by
this Court that s. 24B did not authorise the levy of tax on receipts
by the Jegal representative of a dece-ased person in the year of
assessment succeeding the year of account beifig the previous year
E
in which such penion died.
The assessee had ordinarily to be a
living person and could not be a dead person.
By s. 24B the
F
legal personality of the. deceased assessee was extended for the
duration of the entire previous year in the course of which he
died,
The income received by him before his death and that
received by his legal representative after his death but in that previous year became assessable to income tax in the relevant assessment year.
Any income received in the year subsequent to the
previoUs year or the accounting year could not be called income
received by the deceased person. Thus the provisions of s. 24B
G
did not extend to tax liability of the estate of a deceased person
btyo,nd the previou~ or the accounting year in which that person
died.
To the same l!lloct is the decision in Commissioner of
fntome rax, Bomba.v v. James Anderson('). Indeed the learned
coun~l for the Revenue did not afid could not rely on the provisions af s. 159 cl' the Act in the :present case nor was any reliance
al 31 I. T. R. 343.
H
C.l.T. v. HUKAMCHAND (Graver, J.)
789
A placed on any other section in the Act apart from s. 41 ( l). The
question referred is a.lso based on that very section. That section,
in our opinion cannot possibly apply to the present case bec.ause
the assessee who is roow sought to be taxed is noc the assessee contemplated by that section.
The assessee withhn s. 41 (1), namely,
Kanhaiyalal having died the Revenue could not take any advantage
B of its prnvisions. The High Court rightly observed that the question whether the amount of Rs. 24,341/- was )iable to tax as the
personal income of the assessee did not arise in the present case in
which the sole point to b\e decided was whether that amount was
assessable in the assessee's hands under s. 41 (1) of the Act.
c
We, therefore, entirely concur in the view of the High Cow.t
and agree with the answer ret1.1rned by it. In t;bei result ,the ,appeal
fails .and it is dismissed with costs.
K.B.N.
Appeal dismissed_