Estate income tax assessment must await resolution of unresolved title and escheat dispute before finalisation.

Where the ownership of an estate remains under unresolved litigation, income from the estate cannot be conclusively assessed until the title controversy is decided. The text states that, on the facts then available, it could not be said that the estate had escheated to the State of Bihar, and that an escheat would exclude income-tax assessment. The tax proceedings were therefore to await disposal of the pending heirship or escheat dispute before finalisation, and the High Court's answer was set aside.

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Issues: Whether income from the estate could be assessed in the hands of the Court of Wards manager before the dispute as to escheat or heirship was finally resolved.

Analysis: The estate was under the management of the Court of Wards and the succession to the property remained in dispute. The Court held that, on the facts then available, it could not be said that the estate had escheated to the State of Bihar. Since an escheat would exclude assessment to income-tax, the matter could not be finally concluded until the pending litigation determining the right to the estate was disposed of.

Conclusion: The assessment could not be finally upheld at that stage, and the question of escheat was left open for decision after the disposal of the pending litigation.

Final Conclusion: The High Court's answer was set aside and the tax proceedings were directed to await the outcome of the title dispute before finalisation.

Ratio Decidendi: Where the ownership of an estate is under unresolved litigation and escheat to the State is still in issue, a final tax assessment on the estate cannot be conclusively sustained until the title controversy is determined.

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