Law:

Section:

Section 41 of the indian income-tax act, 1922 [corresponding to section 164(1) of the income-tax act, 1961]-trust-charge of tax where share of beneficiaries unknown- On death of last holder, estate came in the hands of court of wards-heirs to estate were indeterminate as heirship litigation was pending in court-whether in view of pending litigation, court of wards was liable to assessment under section 41 at maximum rate-held, on facts, yes Facts On the death of the last holder of estate B, it came into the hands of the court of wards, the assessee. The ITO assessed the income of the estate in the hands of the assessee at the maximum rate under section 41 of the 1922 Act [corresponding to section 164(1) of the 1961 Act]. On appeal, the A AC confirmed the ITO's order, rejecting the assessee's contention that the estate was not taxable under section 41 as it had been escheated to the State of Bihar. On further appeal, the Tribunal confirmed the AAC's view holding that as the heirship to the estate being the subject-matter of pending litigation, started by one of the claimants, it was too early to hold that the estate had escheated to the Government. On reference, the High Court set aside the assessment made upon the assessee and consequently the question relating to charge-ability at the maximum rate became academic. On further appeal, the Supreme Court pointed out that in the heirship litigation the trial court decision that the estate had escheated to the State of Bihar had been reversed by the High Court and the claims of certain heirs had been allowed. Hence, the Supreme Court restored the present case to the High Court for disposal in accordance with law and in the light of the decision in the heirship litigation. On remand: Held In the heirship litigation, the State Government had filed an appeal against the of this Court holding that there had been no escheat. This appeal of the State Government was still pending in the Supreme Court. It was difficult to foresee what will be the final decision of the Supreme Court. The heirs were still indeterminate. The question as to who would inherit the estate was still a controversy. Hence, it was difficult to hold…

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