Holding

Section 168(3) mandates that the executor continue to be assessed until the estate is completely distributed among the beneficiaries; therefore the income should be taxed in the executor's hands.

Summary

The appellant Navnitlal Sakarlal was bequeathed half of his grandfather's estate under a 1956 will that named no executor. The deceased's son, Sakarlal Balabhai, acted as legal representative and filed tax returns for the estate, being assessed on the estate's income until 1967-68. The Income Tax Officer held that the estate vested immediately in the two grandsons and taxed half of the income in the appellant's hands, a view affirmed by the Assistant Commissioner but reversed by the Income Tax Appellate Tribunal. The Gujarat High Court later ruled in favour of the Revenue, holding that the estate was already administered. The Supreme Court held that under Section 168(3) of the Income Tax Act, the executor remains assessable until the estate is fully distributed, and since distribution occurred only on 5 August 1970, the income should have been taxed in the executor's hands, not the legatee's.

Issues considered

Whether the income of the estate of a deceased person is chargeable to tax in the hands of the executor under Section 168 of the Income Tax Act, 1961 when the estate has not been fully administered.
Whether the administration of the estate was complete despite the outstanding estate duty liability and pending distribution of assets.

Legislation cited

Estate Duty Acts. 53, s. 55
Income Tax Act, 1961s. 159, s. 168

Subjects

Income TaxEstate AdministrationExecutorSection 168Estate DutyWillLegateeTax Assessment

Judgment

NA VNIT LAL SAKAR LAL A
v
COMMISSIONER OF INCOME TAX

OCTOBER 29, 1991

[S. RANGANATHAN, V.RAMASWAMI AND N.D. OJHA, JJ.]
B
Income Tax Act, 1961:

Section 168-lncome from estate of deceased person-Properties be-
queathed to two grandsons-No executor named in the will-Son of testator
administering the estate-Part of estate duty liability outstanding-:v'esting of
properties in the legatees-When takes place-Administration of es- C
tate-Wlzether complete-Half of the income from estate assessed at the
hands of assessee one of the two legatees-Assessments whether validly
made.

The grandfather of the appellant assessee executed a will in 1956
bequeathing his properties to the assessee and his brother. The testator D
died in 1957 and since no executor was named in the will, his son 'S'
describing himself as the legal representative of the deceased, furnished
Income Tax and Wealth-Tax returns in respect of the estate of the
deceased and he was assessed on the basis of the said returns up to
assessment year 1967-68.
E
In respect of the assessee, the Income Tax Officer took the view that
the estate of the deceased vested in the two grandsons viz., the assessee
and his brother immediately on the death of the testator, as per the terms
of the will. The Income Tax Officer included half of the income from
properties left behind by the deceased in the total income of the assessee in F
respect of assessment years 1963-64 ,to 1967-68, rejecting the assessee's
contention that the estate was in the administration of the Executor and
the income thereof had rightly been assessed in the hands of the executor.
On appeal, the A,pellate Assistant Commissioner confirmed the view
taken by the Income Tax Officer. However, the Income Tax Appellate .
Tribunal took the view that the assessee was not taxable in respect of any G
part of the estate of the deceased, and deleted the additions made in the
assessment orders.

At the instance of the Revenue, reference was made to the High
Court on the question of assessability of the half share of the estate of the
585 H
586 SUPREME COURT REPORTS (1991) SUPP. 1 S. C.R.

A deceased at the hands of the assessee, and the High Court answered the
question in favour of Revenue. Aggrieved against .the High Court's orders
the assessee preferred the present appeals.
On ·behalf of the assessee, it was contended that where a person dies,
the income of the estate of the deceased person is chargeable to tax in the
hands of the executor, and since 'S' the son of the deceased was an
B 'executor' within the meaning of Section 168 of the Income Tax Act, 1961
· in respect of the estate of the deceased, the income from the properties left
behind by the deceased was to be assessed in the hands of the Executor
only and not in the hands of the appellant assessee, and that the discharge
of the estate duty liability of the estate of the deceased being one of the
primary functions of an executor the administration of the estate cannot be
C said to be complete until the estate duty liability was properly provided for.
On behalf of the Revenue, it was contended that the will contained a
direct and simple bequest in favour of the assessee and his brother; that
there was nothing in the estate to be administered and the properties
vested in the two legatees immediately. It was also contended that the
D delay on the part of the executor in making payment of estate duty and
handling over the properties to the two legatees cannot postpone the vest-
ing of the estate in the two beneficiaries.

Allowing the appeals, this Court,

, HELD :1.1 Section 168(3) of the Income Tax Act, 1961 makes it clear
E that the executor will continue to be assessed until the estate is dis-
tributed among the beneficiaries equally according to their several inter-
ests. This provision does not enact anything different from the
pre-existing law on the subject. [596 BJ

1. 2 In view of the facts and circlimstances of the present case, the
F High Court was wrong in coming to the conclusion that the administra-
tion must be deemed to have come to an end.
Raghava/u Naidu & Sons v. C.l. T., (1950) 18 l.T.R. 787 (Mad.),
referred to. (595 E]

G 2.1. Having regard to the nature of the properties left by the
deceased it is clear that the executor had certain steps to take-before he
could wash his hands off the administration of the estate. The movable
properties and the immovable properties belonging to the deceased in his
indMdual capacity had to be divided into two equal shares and handed
H over to the two beneficiaries. A perusal of the assessment order also
N.L. SAKARIAL v. C.l.T. 587

indicates that the deceased had a half share in a firm. The executor, A
continued to derive a half share from the firm. There is no information on
"1
record as to how this share the firm held by the deceased was disposed
of. It was part of the duties of the executor to make arrangements
regarding the devolution of the share of the deceased in the firm by having
the two legatees taken in as partners in respect of a one-fourth share each
in the firm. In the absence of any such steps, the asset in questian cannot
B
be deemed to have vested in the beneficiaries. [595 E-H]

2.2. There is nothing on record to indicate that there was any
deliberate attempt on the part of the executor to postpone the distribution
of the estate. There is also nothing to indicate that the assessment c
proceedings were in any way delayed by the executor or the other legal
representatives. A substantial part of the estate duty had been paid
without delay and there is nothing to suggest that the payment of the
balance of the estate duty was delayed deliberately by the executor. [593
C-E]
D
Navnitlal Sakarlal v. C. W. T., (1977) 106 I.T.R. 512, approved.
\

Navnitlal Sakarlal v. CIT, (1978) 125 I.T.R. 67, overruled.

3. Under the Estate Duty Act, the accountable person is jointly and
severally liable for the whole of the duty along with other accountable E
persons. This does not necessarily mean that the incidence of the duty will
ultimately fall on him always. But he has to consider ways and means of
paying the duty and, though he may or may not be able to pay off the entire
estate duty before distributing the estate, he will be exposing himself to a
great risk if he does not make adequate arrangements for the due payment F
of the duty, before distributing it. The High Court was wrong in taking the ·
view that the fact of a part of the estat~ duty liability being outstanding
should be ignored in deciding the issue as to whether administration is
complete. [594 D-GJ

Leelavatamma v. C.E.D., (1991) 1881.T.R. 803 (SC), relied on. G

-1'' C.l. T. v. Bakshi Samparan Singh (1982) 133 ITR 650 (P&H);
C.I. T. v. Ghosh, ( 1986) 159 /TR 124 (Cal.); Raghava/u Naidu & Sons v.
C.I. T. (1950) 18 ITR 787 (Mad.); referred to.

xxx xxx xxx
588 SUPREME COURT REPORTS (1991) SUPP. 1 S. C.R.

RANGANATHAN, J. Balabhai Damodardas, aged 98 years, executed
A a will on October 6, 1956, so that, after his death, his property might be
"administered as per [his] desire". The material provisions of the will were '
as follows:

"2. I have the following properties of my ownership:-
B ( a) My individual i.e.· personal movable and immovable
property which is being assessed in Income Tax as individual:

(b) Whatever right, title and interest I have in movable and
immovable properties of our joint family. •.

c There was no executor named in the will.

3. The above movable and immovable properties I may enjoy,
sell or exchange in future, but if by God's will at the time when
I am not alive ·whatever is left of my individual personal
property of my ownership includi.1g additions or deletions
D therefrom after paying iny debts, income-tax, super-tax, estate
duty, municipal tax etc. and any other outstandings as also
medical expenses and expenses for obsequial ceremonies and
charity and also my right, title and ir.terest in otir joint family
movable and immovable properties, in that way all my property
when I am not alive shall be taken possession of by my two
E grandsons Navnitlal Sakarlal and Nandkishore alias Shamub-
hai Sakarlal and they shall use and enjoy the same as they
desire."

There was no executor named in the will.

F Balabhai Damodardas died on 31-12-57. Thereafter, his son, Sakar-
lal Balabhai, describing himself as the legal representative of the deceased,
furnished returns of income as well as returns of wealth in respect of the
estate of the deceased Balabhai Damodardas and he was assessed on the
basis of those returns for the assessment years following the death and up
G to assessment year 1967-68.

We are concerned in these appeals with the income tax assessments
of Navnitlal Sakarlal (herein referred to as the 'assessee'), one of the two
grandsons of Balabhai Damodardas, to whom the latter had bequeathed
his properties, for the assessment years 1963-64 to 1967-68. The Income
·H Tax Officer took the view that the estate of Balabhai Damodardas had
. N.L SAKARLAL v. C.l.T. ( RANGANATHAN, J.) 589

vested in the two grandsons immediately on his death as per the terms of A
the will. He, therefore, proceeded to assess the assessee and his brother
separately in respect of one half of the income from the properties left
behind by Balabhai Damodardas. The contention of the assessee, that the
estate of the deceased was still under Administration and continued to be
so till August 5, 1970, and that the income thereof had rightly been as-
sessed, in the earlier ye:irs as well as in the year as well in the years present- B
ly under consideration, in the hands of Sakarlal Balabhai as executor, was
""' rejected. The Appellate Assistant Commissioner also confirmed the view
taken by the Income-Tax Officer, though, for the assessment years 1966-67
and 1%7-68 he made some modifications in the assessments with which we
are not here concerned.

The Income Tax Appellate Tribunal had earlier taken the view, in
c
the wealth-tax assessments of the assessee and his brother for the assess-
ment years 1%3-64 and 1964-65, that, on the death of Balabhai Damodar-
das, the assessee and his brother had become the owners of interests in the
estate in accordance with the will and were consequently assessable to
... wealth-tax in respect of their respective shares in the estate. This view had D
also been upheld by the Gujarat High Court in its judgment reported as
Navnitlal Sakarlal v. C.W.T. [1977] 105 I.T.R.512. However, when the in-
come-tax appeals for the assessment years 1964-65 to 1967-68 came up
before the Tribunal, it took the view that the assessee was not taxable in
respect of any part of the income of the estate of Balabhai Damodardas for
these assessment years. The additions made in the assessment orders in E
this respect were deleted.

At the instance df the Revenue, the following question was referred
to the High Court of Gujarat for its opinion under section 256(1) of the
Income Tax Act.1961 :
F
"Whether the Income Tax Appellate Tribunal was right in law
in holding that half share of the income in respect of the estate
of late Shri Balabhai Damodardas was not taxable in the hands
of the assessee when the estate was being administered by Shri
Sakarlal Balabhai, having regard to the provisions of Section
168 of the Income Tax Act, 1961?" G

This question has been answered by the High Court - its decision has
been reported as Navnitlal Sakarlal v CIT in [1978) 125 I.T.R.67 - in the
negative and in favour of the Revenue. The present appeals have beer.
preferred by the assessee from the High Court's judgment. H
590 SUPREME COURT REPORTS (1991) SUPP. 1 S. C.R.

A At the outset, two aspects which had been raised before the High
Court, may be cleared up. In the first place, the contention of the assessee
before the High Court was that the decision in the wealth-tax case would
not govern the income tax assessments in view of the provisions contained
in Section 168 of the Income Tax Act, 1961, a provision corresponding to
which (viz. s.19A) has been introduced in the Wealth Tax Act only on
B 1.4.65. The High Court pointed out - and it is common ground before us -
that "in view of the distinction between the provisions of the Wealth Tax
Act anti the Income Tax Act and in view of the fact that, for the relevant
years under consideration before the Division Bench which considered the
wealth-tax case, namely, assessment years 1963-64 and 1~65, section
19-A was not on the statute book, the decision in the wealth-tax case will
C not affect the decision in this case except in an indirect manner". The
second issue, on which a certain amount of debate took place before the
High Court, was· as to whether Sakarlal Balabhai could be treated as an
'executor' within the meaning of section 159 of the Income Tax Act,1961,
considering that the will had not named any executor and that Sakarlal
Balabhai had taken charge of the estate and began administering it volun-
D tarily. On this point, the High Court has held, after discussing the relevant
provisions, that Sakarlal Balabhai was a person who intermeddled with the
estate of the deceased and was, therefore, included in the definition of
'legal representative' for the purposes of the Income Tax Act. On this point
also there is no dispute before us.

E The only questions arising for our consideration is about the proper
mode of assessment of the income from the .properties left by Balabhai
Damodardas. The procedure to be followed., when an assessee dies, is set
out in section 168 of the Act. This section reads as follows:

168. (1) Subject as hereinafter provided, the income of the
F . estate of deceased person shall be chargeable to tax in the
hands of the executor,

(a) If there is only one executor, then, as if the executor were
an individual; or

G (b) If there are more executors than one, then, as if the' ex-
ecutors were an association of persons;

and for the purposes of this Act~ the executor shall be deemed·
to be resident or non-resident according as the deceased per-
son was a resident or non-resident during the previous year in
H
which his death took place.
N.L SAKARlAL v. C.l.T. [ RANGANATIIAN, J.] 591

(2) The assessment of an executor under this section shall be A
made separately from any assessment that may be made on
him in respect of his own income.

(3) 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 B
to· the date of complete distribution to the beneficiaries of the
estate according to their several interests. ·

(4) In computing the total income of any previous year under
-this section, any. income of the estate of that previous year
distributed to, or applied to the benefit of, any specific legatee C
of the estate during that previous year shall be excluded; but
the income so.excluded shall be included in the total income of
the previous year of such specific legatee.

Explanation : In this section, "executor" includes an adminis-
trator or other person administering the estate of a deceased D
person.
' On behalf of the appellant, Sri Salve submits that, when a person
dies, the income of the estate of the deceased person is chargeable to tax in
the hands of the executor, separate assessments being made on the total
income of each completed previous year or part thereof comprised in the E
period from the 'date of the death to the date of c:Omplete distribution to
the beneficiaries of the estate according to their several interests'. He
points out that it is now common ground that Sakarlal Balabhai was an
'executor' within the meaning of section 168 in respect of the estate of the
deceased. 'I:he Tribunal has also given a categorical finding of fact in the
following terms: . F
"Balabhai Damodardas died on December 31, 1957, leaving
behind as his next-of-kin a son, named Sakarlal Balabhai,
three daughters and a number of grand-children including
the appellant assessee and his brother. On the death of I
Balabhai Damodardas, Shri Sakarlal Balabhai took charge G
.... of the properties left behind by the deceased and started
administering them. By an order made on December 30,
1961, an amount of Rs.1,04,619 was determined as the estate
duty payable on the properties passing on the death of
Balabhai Damodardas. It is not in dispute that upto the H
close of the assessment year 64/65, part of the estate ·duty
592 SUPREME COURT REPORTS [1991) SUPP. 1 S. C.R.

A was remaining unpaid and further upto the last day of the
accounting year for the assessment year 67/68 which is the last
assessment year in appeal, the estate was not distributed or
•
applied for the benefit of the assessee and his brother, the two
legatees. As a matter of fact nothing was distributed till 5th
August, 1970".
B
He submits that, on the above finding of fact and the clear terms of
sec.168(3) & (4), the income of the properties left by Balabhai Damodardas
had to be assessed in the hands of Sakarlal Balabhai, commencing from the
date of death and at least till the 5th of August, 1970.

C We are of the opinion that the above contention urged on behalf of
the assessee is well founded. There is now no dispute that Sakarlal Balab-
hai was the executor in respect of the estate left by Balabhai Damodardas.
There is also no dispute that the income from the properties left by Balab-
hai Damodardas was assessed in the hands of Sakarlal Balabhai for the
assessment years 1958-59 to 1962-63. Nothing has happened since to
D change the above position. The Tribunal has found that Sakarlal Balabhai
was administering the estate as an executor and that the estate was not
distributed till the 5th of August, 1970. It has also pointed out that the
estate duty payable in respect of the properties passing on the death of
Balabhai Damodardas had not been paid till the close of the previous year
relevant to the assessment year 1964-65. Though the Tribunal has not set
E out in detail the manner in which the estate was ultimately distributed, it
has given a categorical finding that, as a matter of fact nothing was dis-
tributed till the 5th of August, 1970, implying that there was a distribution
on that date. The Revenue has not challenged the correctness of this find-
ing of fact either generally or by raising a specific question of law as to
whether this finding was based on any material. In the face of these find-
F ings by the Tribunal, it is not possible to hold that the administration of the
estate was complete in any of the previous years with which we are con-
cerned.

On behalf of the Revenue, Sri Manchanda vehemently contends that
G the will contained a direct and simple bequest in favour of the assessee and
his brother. He submits that there was nothing in the estate to be ad-
ministered and that the properties directly vested in the two legatees im-
mediately in equal shares. According to his submission, the mere fact that
·Sakarlal Balabhai purported to take charge of the estate and administer it
and was prolonging the so-called administration by delaying the payment
H of estate duty and the handing over the properties to the only two legatees,
N.L. SAKARLAL v. C.l.T. [ RANGANATHAN, J. ) 593

cannot postpone the vesting of the estate in the two beneficiaries. It is A
submitted that there was no complicated process of administration called
for in the present case. He submits that the intervention of Sakarlal Balab-
hai was part of a device to postpone a direct and immediate vesting of the
income and the properties in the hands of the legatees in view of the. high
rates of tax applicable to their individual assessments and to cordon o(f tlie
income and the estate into a separate assessment, purportedly on a so- B
called executor. He submits that the Court should not encourage attempts
of this type to avoid the legitimate incidence of taxation and that, in the
circumstances, the answer given by the High Court to the reference should
be upheld. ··

There are a number of difficulties in accepting the contention put Cr~
forward by Sri Manchanda. In the first place, the contention, its present
1
r{
form, has not been put forward at any of the earlier stages. There is nothing·
in the statement of facts or in the orders of the authorities to indicate thaf. · •
there was any deliberate attempt on the part of the executor to postpone
the distribution of the estate. As we have mentioned earlier, Balabhai '·
Damodardas died on 31.12.57 and the assessment to estate duty of the D
estate passing on his death was completed on December 30, 1961. There is
• nothing to indicate that the assessment proceedings were in any way
delayed by the executor or the other legal representatives. A substantial
part of the estate duty had been paid by October or November 1963. There
is nothing to suggest that the payment of the balance of the estate duty was
delayed deliberately by the executor. E
Again, the submission thii't there was nothing in the estate to be
administered and this process was being deliberately prolonged by the
executors and the legatees is not based on the record. Though a reference
has been made to the estate duty liabilities being outstanding, there is
nothing to show that the only thing that remained to be done was the F
payment of estate duty and that nothing else remained to be done. There is
no information on record before us as to the various assets and liabilities of
the estate shown by the executor. No attempt has been made to find out
whether there were any other outstanding liabilities and when these were
discharged. We have mentioned earlier that the Tribunal has found that
something was ~one towards the distribution of .the·~#J.~n 1970 and it is
G
not the suggestion of the Department that this finding 1s based on no
material. It is, therefore, not possible to allow the counsel for the.Revenue
to raise this contention at this stage.

Proceeding on t~e premise that only the estate duty liability was H
outstanding, a contention appears to have been put, forward for the •
594 SUPREME COURT REPORTS (1991) SUPP. I S. C.R.

A Revenue that the discharge of the estate duty liability is the personal
liability of the residuary legatees and is no part of the duties of the ex-
ecutor. This argument has been accepted by the High Court. On behalf of
the assessee, it is submitted that the discharge of the estate duty liability in
respect of the estate of the deceased is one of the primary functions of an
executor and that the administration of the estate can not be said to be
B . complete until the estate duty liability is properly providt:d for, vide:
C./. T.v. Ghosh (1986] 159 1.T.R. 124 (Cal), We are of opinion that there is
forece in the appellant's contention. It seems that, under the English Law,
estate duty is regarded as part of the "testamentary expenses" in respect of
certain kinrfs of pr<,>perty : [See Williams on Executors and Administrators,
14th Edn.Vol.l, pp.452-4]. The Estate Duty Act makes the executor one of
C the accountable persons. Under S.55, he has to deliver an account of the
estate passing on the death. He is accountable, under S.53, for the whole of
the estate duty on the property passing on the death though he will not be
liable for duty in excess of assets of the deceased which he actually
received or which, but for his own neglect or default, he might have
received. He is jointly and severally liable for the whole of the duty-cilong
D with other accountable person. It is true that this does not oecessarily mean
that the ultimate incidence of the duty will ultimately fall on him always.
But he has to consider ways and means of paying the duty and, though he
may or may not be able to pay off the entire estate duty before distributing
the estate, he will be exposing himself to a great risk if he does not make
adequate arrangements for the due payment of the duty, before distribut-
E ing it. The proposition enunciated in the cases referred to by the High
Court that the estate duty is a personal liability of the heirs and is not a ·
debt or encumbrance deductible in computing the principal value of the
estate - a proposition now settled_ by the decision of this Court in
LeelaFatamma v. C.E.D. [1991] 188 I.T.R. 803 (S.C) or the fact that the
estate duty is a charge on the immovable properties passing on death do
F not detract from the duties and responsibilities of the executor, as an ac-
countable person, to make satisfactory arrangements for the payment of
the estate duty. It is, therefore, difficult to accept the view of the High
Court that the fact of a part of the estate duty liability being outstanding
should be ignored in deciding the issue as to whether administration is
G · complete.
The High Court has also expresed the view that the administration
of the estate should be deemed to be complete as the estate could and
ought to have been handed over by the executor to the legatees. It· has
accepted this submission because, in its view, the executor had postponed
H the actual distribution between the two residuary legatees though all debts
N.L SAKARI.AL v. Cl.T. ( RANGANATHAN, J.] 595

had been discharged and the residue could have been easily ascertained. A
Applying the test propounded by Viswanantha Sastri,] in Raghavalu Naidu
& Sons v. C./.T. (1950) 18 I.T.R. 787 (Mad.) viz:

"[C)an it be said that the residuary estate had taken concrete
shape and could and should have been handed over by the
executors to the persons beneficially entitled but for the fact B
that the estate is Settled in trust and vested in the executors as
trustees?"

_. The High Court held :

"Under these circumstances, the only conclusion that could be
drawn is that by the commencement ofthe period that is under
c
consideration, the residuary estate must be deemed to have
been ascertained and the residuary estate must be said to have
taken concrete shape and should have been handed over by
Sankarlal, the father of the assessee. Administration had
reached such a point that one can infer that the administration D
had been completed and the residuary estate had been ascer-
tained or was capable or easily capable of being ascertained".

We fmd it difficult to accept this conclusion. Even leaving the estate
duty out of account, it is difficult to see how the High Court could have
reached this conclusion. Having regard to the nature of the properties left
by Balabhai Damodardas, it is clear that the executor had certain steps to
E
take before he could wash his hands off the administration of the estate.
The movable properties and the immovable properties belonging to
Damodardas in .his individual capacity had to be divided into two equal
shares and handed over to the two beneficiaries. A perusal of the assess-
ment order also indicates that Balabhai Damodardas had a half share in a F
firm known as Mangaldas Balabhai & Co. It appears that Sankarlal Balab-
hai, as executor, continued to derive a half share from the firm. There is no
information on record as to how this share in the firm held by Balabhai
Damodardas was disposed of. It was part of the dutie~ of the executor to
make arrangements regarding the devolution of the share of Balabhai
Damodardas in the firm say, for example, by having the two legatees taken G
in as partners in respect of a one-fourth share each in the firm. In the
absence of any such steps, the asset in question cannot be deemed to have
vested in the beneficiaries. In fact, even in what may be described as much
clearer situations and where the executor was also the sole beneficiary, it
has been held that the administration is not complete vide, C./.T. vBakshi H
596 SUPREME COURT REPORTS (1991] SUPP. 1 S. C.R.

A Sampuran Singh, (1982) 133 I.T.R. 650 (P&H) and C./.T. v. Ghosh (1986)
tS9 I.T.R. 124 (Cal). .

Section 168 (3) makes it clear that the executor will continue to be
assessed until the estate is distributed among the beneficiaries equally ac-
cording to their several interests. This provision does not enact anything
B different from the pre-existing law on the subject which has been clearly
enunciated by Viswanatha Sastri, J. in Raghavalu Naidu, cited earlier, in
these words :

"Chapter VII vf the Indian Succession Act, 1925, succinctly J_
defines the duties of executors. Shortly stated, it is their duty to
clear the estate - to pay the debts, funeral and testamentary
c expenses and the pecuniary legacies, and to hand over the as-
sets specifically bequeathed to the specific legatees. When all
this has be~n done, the balance left in the executor's hands is
the residue and must be paid over to the residuary legatees
under Section 366 of the Succession Act or held in trust for
D them,; if the directions in th~ will require the residue to be so
hel.d: Section 211 (1) of the Succession Act constitutes the ex-
ecutor of a deceased person his legal representative for all
purposes and vests all the property of the deceased in the
. .executor. Though no time 'limit is fixed by the section for the
duration in the office of executor with its powers and rights,
E and in this sense an executor ,remains an executor for an in-
definite time, the property, which he has in the estate that
devolves upon him and over which his powers extend, does not
remai~ftis' iit"definitely. By his assent to the disposition in the_
J t)'will>ffl.~f~ome operative, the executor is pro tatZto divested
2. <Jf t\riel 1pWperty which was his virtue officii, and the legatees
F l\ave vested In them as owners, the property in. the subject-mat-
ter of the bequests. Under Sections 332 and 333 of the Succes-
sion Act, the assent of the executo~ to a legacy may be express
or implied from his conduct. By assent is meant not that the
executor concurs in the dispositions in the will but that he
G assents to the disposition taking effect upon the specific
property if the bequest is specific, upon the sum of money if it
is pecuniary or upoit the residue brought out by the executor at
the end of the administration, if it is a residuary beyuest. There
is the same necessity for the executor's assent to a bequest of the
residue as to a bequest of a specific or pecuniary legacy. So soon
H as he assents~ to the dispositions of the will -- and the assent
N.L SAKARIAL v. C.l.T. [ RANGANATIIAN, J.) 597

may be express or implied from his conduct -- they become A
fully operative and the title of the legatees becomes absolute. If
there are trusts declared or created by the will in respect of the
subject-matter of the bequest the trusts take effect on such
assent, the estate vested in the executor as such is divested and
vests in the trustees of the will. The fact that the executors are
themselves the trustees does not make any difference. Nor B
does the fact that the bequest is of the residue affect the point,
once the residue has been ascertained in due course of ad-
ministration. See Attenborough v. Solomon [1913) A.C. 76. ·

xxx xxx xxx

The decision in Lord Sudeley v. Attorney- General, (1897) A.C.
c
11 is authority for the position that even if the trustees and
executors happen to be the same persons, until the claims of
the testator's estate for his debts and testamentary expenses
and the pecuniary and specific legacies have been satisfied, the
residue does not come into actual existence. It is a non- existing D
. thing, until that event has occu"ed. The probability that there will
be a residue is not enough, but it must be actually ascertained. •
Dealing with a trust of the residuary estate Lord Halsbury,
L.C., observed : 'Even if the trustees and executors happen to
be the same persons, until the estate is fully administered until
the thing has been ascertained, until the trnst fund has been con- E
stituted, the thing of which the trnstees are trnstees hos not been
ascertained. Till then the right of the residuary legatee is to
require the executors to administer the estate completely'.

xxx xxx xxx
';.,_. F
Younger, L. J. (afterwards Lord Blanesborough) in Bamardo's,
Homes v. Special Income Tax Commissioners [1921] 2 A.C. 1
stated the law in these terms :

"Until the residue is ascertained, and until its existence as net
residue has been acknowledged by the executor, either by pay- G
ment to the residuary legatee, or if the residue be settled, by the
appropriation of o fund to meet the settled residue, the residuary
legatee has no interest in any specific part of tlzat which sub-
sequently becomes residue as a specific fund but his right is, until
that moment of time arrives, to have the .estate administered in H
598 SUPREME COURT REPORTS (1991) SUPP. 1 S. C.R.

A due course'. The House of Lords affirmed the decision of the
Court of Appeal on the ground above stated.

XXX XXX 1XX

The residuary legatee might be interested in the estate subject
to the payment of debts and legacies, but he did not become
B the proprietor or owner of the residue except when a residue
had been ascertained which, on completion of administration, is
made over to him by the executiors.
The question in each case is, has the administration reached a
point at which you can infer that the ·administration has been
completed, the residuary estate has been ascertained, the be-
c quest of the residue has been assessed to and the residuary
estate therefore became vested in trustees, be they the ex-
.ecutors themselves or strangers ?

In other words, can it be said that the residuary estate had
taken concrete shape and could and should have been handed
D over by the executors to the persons beneficially entitled but
for the fact that the estate is settled in trust and vested in the
executors as trustees ?"
(Emphasis added)

E We have, therefore, to look at the factual position and find out
whether the executor has ascertained the residue and acknowledged its
existence. Even taking it that the last sentence· of the above quotation goes
a little further and enables the Court to "deem" the administration to have
come to an end where the facts clearly-show that everything necessary has
been done in this regard, it is difficult to accept the conclusion of the High
p Court in the present case that the administration mu'it be deemed to have
come to an end in the face of the factual findings in the case which have
been referred to earlier. ·

For the reasons discussed above, we are of the opinion that the
High Court, in the circumstances of the case, should not have interfered
G with the Tribunal's finding and that the question referred should have been
answered in the affirmative and in favour of the assessee. We, therefore,
allow the appeals and answer the above question in the affirmative. The
assessee will be entitled to his costs.

G.N. Appeals allowed.