Residuary legatee payments during estate administration remain taxable in the executor's hands until the residue is ascertained.

Amounts paid by an executor to a residuary legatee before completion of estate administration are not excluded from the net wealth assessable in the executor's hands. Under section 19A of the Wealth-tax Act, only assets distributed to, or applied for the benefit of, a specific legatee fall outside the estate; a residuary legatee has no right, title or interest in any particular asset until the residue is ascertained and administration is complete. Such interim payments are treated as payments on account, and maintenance expenditure does not convert them into assets held under an independent title.

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Issues: Whether amounts paid by an executor to a residuary legatee during pending administration of the estate are excludible from the net wealth of the deceased's estate in the executor's hands.

Analysis: Under section 19A of the Wealth-tax Act, the estate of a deceased person is assessable in the hands of the executor, and sub-section (6) excludes only assets distributed to, or applied to the benefit of, a specific legatee. A specific legacy is a bequest of a specified part of property distinguished from the rest of the estate. A residuary legacy stands on a different footing: no right, title or interest in any particular asset arises until the residue is ascertained and administration is complete. Payments made by the executor before completion of administration were treated as only payments on account and not as a transfer of absolute title out of the estate. The minor's claim to maintenance did not change the character of the payments, since such expenditure continued to represent estate assets and did not create a separate, independent title in the recipient.

Conclusion: The amounts paid to the residuary legatee were not excludible from the net wealth of the deceased's estate and remained assessable in the executor's hands.

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