Law: Income Tax Act, 1922

Section: 24B

Section 159 of the Income-tax Act, 1961 [Corresponding to section 24B of the Indian Income-tax Act, 1922] - Legal representatives - Assessment years 1950-51 to 1954-55 - Deceased, who was one of three partners of firm of solicitors which kept its accounts on cash basis, died on 7-7-1949 and outstandings of firm in respect of work done prior to 7-7-1949 which were realised during five years relevant to assessment years 1950-51 to 1954-55 were divided between those partners and certain sums of money were paid out to heirs and legal representative of deceased - Whether legal personality of deceased assessee, which ordinarily ceased after his death, is extended by section 24B for duration of entire previous year in course of which he died so that income received by him before his death and that received by his heirs and legal representatives after his death but in that previous year becomes assessable to income tax in relevant assessment year - Held, yes - Whether, thus, legal representatives by fiction of law, become assessee but that fiction cannot be extended beyond object for which it is extended - Held, yes - Whether, in view of aforesaid, section 24B did not authorise levy of tax on receipts by legal representatives of deceased person in years of assessment to succeeding years of account being previous year in which such person died - Held, yes FACTS A, one of the three partners in a firm of solicitors, died on 7-7-1949. After his death the arrangement between the various partners in regard to the realisations of the old outstandings was that in respect of the work done up to the death of the realisations were to be divided amongst three partners. The firm kept its accounts on cash basis. For the five assessment years 1950-51 to 1954-55, the following amounts were received: Rs. 37,847, Rs. 43,162, Rs. 34,899 Rs. 13,402 and Rs. 32,523 by the heirs and legal representatives of A out of the outstandings. The ITO sought to tax these realisations. For the assessment years 1950-51 and 1951-52 he assessed the amounts in the hands of the heirs and legal representatives of A as a HUF. The Tribunal agreed in holding, though for different reasons, that the amounts were…

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