18 LIABILITY IN SPECIAL CASES Topic Refer | i fencer ag. tel Represenatives, Representative Assesses and Tae q_Beceptions to Charging Section ao EGAL REPRI u ESENTATIVES, REPRESENTATIVE ASSESSEE'S AND EXECUTORS ‘egal representative’? Explain brie z : a y ca Ee plain briefly the provisions governing assessment of the legal representative of wee Meaning of Legal representative [Section (29): Legal re ; ! epresentaive” has the meaning assigned to it in section lth Code of Chl Procedure, 18, As per thes cause “al represnatve” means a Peon who in law rents the estate ofa deceased person, and includes any person wo infermedales with the estate of the decease where a party sues or is sued in a representative character the person on whom the estate devolves onthe death of te party so suing or sued. uwessment of Legal representative [Section 155]: The provisions governing assessment of the legal representative of deceased assessee under section 159 are as follows ~ 1) Liability of Legal representative : Where a person dies his legal representative shall be lable to pay af TA inhich the deceased would have been liable to pay ifhe had not died, inthe ike manner and to the same exteht 8 ran eensed. The lability ofa legal representative uncer this section shall be limited to the extent to which the gal repr esate is capable of meeting the liability. {)_ Status of pending proceedings : For the purpose of making an assessment including an assesment reassessment srrecomputation ander section 147) ofthe income ofthe deceased and forthe purpose of levying any Sum 9 the hands of the legal representative ~ fa any proce taken agarst the deceased before his death shal be deemed te have been ken. aginst the Tegal representative from the stage at which it stood onthe date ofthe death ‘of the deceased; (b) any proceeding which could have been taken against the deceased if he had survived, may be taken against the legal representative; and (@)_all the provisions ofthis Act shall apply accordingly- ©) Deemed Assessee : Legal representative of the deceased shall be deemed to be an assessee for the purposes of this fet However iis individual assessment willbemade separately, ' Personal Liability : Every legal representative shall be personally liable for any tax payable by him in his capacity parts with any assets ofthe estate ofthe deceased: wie ar in oF ay come in his possession, but such lability shall be limited to the value of the asset 80 charge dispose a ee ; Teenie ag detioy cue it form of inbeied a legal representative, after he had PS inherited bee the deceased, had converted the ‘asset into a different form, the department would be entitled to proceed against the converted asset 0) the same way sit coul have hhad against the original asset of deceased. -M, Abdul Khalick & Co. v1TO [1975] 101 ITR 43 (Mad) Thcase the legal representative have sold the a58 6 Cee ae vedings fora default committed by the deceased ca : Penalty on legal representative : Penalty Pre Ge inna in be continued against the legal representative. However n° prosecution can be initiated against the legal representative for any offence committed by the deceased. : ative shal be entitled to recover the Right to recover raid : The legal representauive & sum so paid on behalf of the Right to recover tx pal TE eed by hen on bel of such decease dies against all the property of any kind The Assessing Officer shall have same 1% year vested in or under the control caer Offer gal representa nse would Me ga the property of deceased ‘ts then the sale proceeds ate liable to be attached, © @ scanned with OKEN ScannerIncome Tax: LIABILITY IN SPECIAL cag 18.2 CA. Yogendra Bang & CA. Vandans ets ei oe —— 1: Section 159 applies in respect of the ine, Note: Income upto the date of death and the end of the accounting Y89" “Sn which the death oeun Of the deceased only: upto the date of death anu not upto the end of the account Tee Thich the death income ofthe estate forthe period from the date of death upto the end of Me AT of death two separate should be assessed under section 188 in the hands of the exectttor Hanh representative and the latter one on distinct assessments would have to fe made, the prior one om the Tegal TePresceAUT’ CL kone on if the representative and the ‘executor’ are one and the same cI Mohan, an individual as tin CASE Notice teswed to only one legal heir és not void but irregular : Chandra Mc a a nae se sai {mestate on 01-10-2018 and left behind three sons. He had filed a return of income for 1 "asset Yer 28 before his dent The Assessing eificer issued a notice of hearing to one of the sons who appeared before him ay omplied with the notice. The assessment was made on him as a legal representative of taco narra was taken that since all the. legal heirs of the deceased were not brought on record, the assess! legal heirs was not valid. Discuss how far such a plea is sustainable in law. (Nov. 2002) ; 3 Ans: The Supreme Court in CIT v. Jai Prakash Singh [1996] 219 ITR 737 (SC) has held that, on lel representa has appeared in response to the notice and has allowed the proceedings to continue against the deceased with objection, then, merely on ground that notice was not served on all legal representatives, the assessment order canoe be held to be null or void but the same would be regarded as irregular and such irregularity can be subsequently tified by bringing all legal representatives on record, Therefore, in sic plea is not sustainable in lave 2 Explain the meaning of representative assessee. Ans: Representative assessee [Section 160] : “Representative assessee” means = In respect of income of - Representative Assesses ~ 1. a non-resident, deemed to accrue or arise in [agent of the non-resident including a person who Is treated India as per section 9(1) anagent u/s 163 2 [a minor, lunatic or idiot the Guardian or Manager entitled t0 receive/in receipt @ income on behalf of such minor, lunatic oF idiot. 3. [any person for whom Court of Wards, [court of Wards, Administrator-General, Official Trustee or Administrator-General, Official Trustee or receiver or manager (including any person who manages receiver or manager is appointed property on behalf of another) appointed by or under any ordet of a court who receives or is entitled to receive such income on behalf of or for the benefit of such person, 4. | trust declared by duly executed instrument in trustee or trustees, appointed under trusty who receives oF BI writing whether testamentary or otherwise, or | entitled to receive income on behalf of/for the benefit of aa) an oral trust such trust, 3. Discuss the liabilities and rights of representative assessee, ‘Ans: Liability of representative asessee [Section 161]: A representative assesse shall be cewmedl to he an assess the purposes ofthis Act. The liability of a representative asessee can be da (He shall be subject to same duties, responsibilities and liabilities accruing (o or in favour of him beneficially (Gi) He shall be liable to assessment in his own name in respect ofthat income (it) Tax shall be levied upon and recovered from hian in like manner upon and recoverable from the person represent! by him, (Gv) He shall not be assessable in respect of such income (ie, income representative assessee) under any other provisions of the Act ¥)_-As per Section 167, the Assessing officer shall have the same remedies against all ropes ind vested not © Sec wp ley fa tin lable to pay any tx, whether the demand is raise against the epresentativg see against the benefiia Rights of representative assessee [Section 162]: The rights of a representative (a) Right to recover the sum paid : Every representative assessee who, entitled to - (@) recover the sum so paid from the person on whose behalf tis paid or cL as follows ~ a8 if the income were income received by & but in representative capacity only and to the same extent as it would be leviable in respect of which he has been assessed 35 4 assessce are as follows . 4S such, pays any sum under this Act, shall @ scanned with OKEN Scanner: LIABILITY IN SPECIAL c, acne Tas Bangar CA. Van ae ean 18.3 {a retain an amount equal to the sum so paid him in his representative capacity Paid out of any money that may be in his possession or may come to ght to retain sum equal to esti ‘ w Fi oe imated tax liability + A ro , int tty, ot ay oy psy Hy A represent asesice may ean sum eal oi principal) Person on whose behalf he is liable to pay tax (ie ght to secure a certificate fro : (Right : m the Assessing officer : In . the amount to be retained pending final set secure from the Assessing Officer a certificate stating for setaining that amount. The amount sare ot lability and the certificate so obtained shall be his warrant int recoverable from such representative assessee at the time of final it shail not exceet oe mol eceed the amount Specified in such certificate except to the extent to which such 'y at such time have in his hands additional assets of the principal. ~ Wf When does the taxability of an executor of an ‘eecutors of an estate as given under section 168, ‘ns: The taxability of executor of an estate under section 168 is as under ~ (a) Executors [Section 168] : estate arise ? Explain the scope and extent of taxability of ji) Taxability of income in the hands of executor : The income of the e al 0 Tuabily of came in he hinds of exer: Ts the estate of a deceased person shall be (@) if there is only one executor, then, as ifthe executor were an individual; or (0) if there are more executors than one, then, as ifthe executors were an association of persons; (i) Residential status : The executor shall be deemed to be resident or non-resident according as the deceased person was a resident or non-resident during the previous year in which his death took place. (ii) Separate assessment on executor in representative capacity and personal capacity : The assessment of an. executor under this section shall be made separately from any assessment that may be made on him in respect of his own income. (iv) Liability as an executor : Separate assessments shall be made under this section on the total income of each completed previous year or part thereof as is included in the period from the date of the death to the date of complete distribution to the beneficiaries of the estate according to their several interests. {e) Income applied for benefit of specific legatee to be excluded : In computing the total income of any previous year under this section, any income ofthe estate of that previous year distributed to, or applied to the benefit of, any specific legatee of the estate during that previous year shall be excluded but the income so texelided shall be included in the total income ofthe previous year of such specific legate. (2) Right of executor to recover tax paid [Section 169]: The provisions of Section 162 shall so far as may be, apply in thease ef an executor in respect of tax paid oF payable by him as they apply in the case of a representative assessee WNéle!"The liabiity ofan executor arises ony incase of testamentary suocession i, succession by will Therefore, in ase of intestate snccession ie. there is no will, then the legal representatives become the executors and liable for tax ‘onthe income from the estate of the deceased. 5 Discus the provision relating to succession of business aterise than on death ‘Ans Succession of business otherwise than on death [Section 170] (1) Liability in case of succession : Where a person carrying Oo” Sy business or profession has been succeeded there dy any ether person wh continues carry on that business or profesion = (the seeker all be assessed in respect ofthe income ofthe previous yearn which the succesion ook place up to the date of succession: f Oars pal be sees in seapet of he ncome ofthe previous Year after he date of succession Oa ae jecessor cannot be found : When the predecessor cannot be found, the assessment of the Lae ester im vnch the sucession 10K place up tothe date of succession and of the previous income ofthe previous Yo ge mae on he suse 8 Uke mae and 0 these extent a woul have ar Freed and al the provisos of his Act shal oar asmay be, apply accordingly 6) Tha sane fox payable By predecessor cannot be recovered: When ay sum payable in respec ofthe Liability in ease tx payee fesion for te previous year in which the succesion took pace upto the date of income of such busines ous year preceding tat Year, assessed on the predecessor, cannot be recovered fom saeesion oot tn shal sora fining that effect and the Sum payable by the predecesa sal @ scanned with OKEN Scanner: ; Income Tax : LIABILITY IN SPECIAL CASES © CA. Yogendra Bangar & CA. Vandana Bangar 18.4 thereafter be payable by and recoverable from the successor, and the successor shall be entitled to recover from the predecessor any sum so paid. (4) Liability in case of succession followed by partition of HUF : Where any business or profession carried on by a HUF is succeeded to, and simultaneously with the succession or after the succession there has been a partition of joint family property between the members or groups of members, then, the tax due in respect of income of business or profession succeeded to, up to the date of succession, shalll be assessed and recovered in the manner provided in Section 171. Note : Income includes any gain accruing from the transfer of business or profession as a result of the succession. EXCEPTIONS TO CHARGING SECTION @ scanned with OKEN Scanner