Estate administration income: Administrator-General was not treated as receiving income on behalf of residuary beneficiaries under section 41.

Section 41 of the Indian Income-tax Act, 1922 applied only where an Administrator-General was entitled to receive income on behalf of beneficiaries. Until administration of the estate was complete and the residue ascertained, the residuary beneficiaries had no present right to the income, which remained part of the estate for administration. An Administrator-General de bonis non in that position received income as administrator of the estate, not as a receiver for the beneficiaries. Section 41 therefore did not apply, and the assessment in the Administrator-General's hands was upheld.

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Issues: Whether, during the administration of an estate, an Administrator-General receives income on behalf of the residuary beneficiaries so as to attract section 41 of the Indian Income-tax Act, 1922.

Analysis: Section 41 applies only where the Court of Wards, Administrator-General, trustee, receiver or manager is entitled to receive income on behalf of a person or persons. The Court held that until the estate is fully administered and the residue ascertained, the residuary beneficiaries have no right to the income as such; the income and corpus remain part of the estate available for administration. An Administrator-General appointed de bonis non in that situation receives the income in the capacity of an administrator of the estate, not on behalf of the beneficiaries. Since the statutory condition that the income be receivable on behalf of the beneficiaries was not satisfied, the further question of the proviso and the maximum rate did not arise for decision.

Conclusion: Section 41 of the Indian Income-tax Act, 1922 was not applicable; the assessment in the hands of the Administrator-General was upheld and the appeals failed.

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