Court-custody money remains attributable to the judgment-debtor until distribution, supporting tax recovery action under section 226(4).

Money deposited in court in execution proceedings continues to belong to the judgment-debtor until it is actually rateably distributed and disbursed to decree-holders. On that basis, a tax recovery application under section 226(4) of the Income-tax Act, 1961 remains maintainable while the funds are still in court custody, because the money is treated as belonging to the assessee until distribution under section 73 of the Code of Civil Procedure. Later payment to the decree-holder does not defeat an application already filed while the money remained undistributed.

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Issues: Whether money lying in the custody of the executing court continued to belong to the judgment-debtors so as to permit the tax authorities to seek payment under section 226(4) of the Income-tax Act, 1961 before the amount was actually disbursed to the decree-holders.

Analysis: Under section 226(4) of the Income-tax Act, 1961, the Assessing Officer or Tax Recovery Officer may apply to the court for payment out of money belonging to the assessee and in the court's custody. Read with section 73 of the Code of Civil Procedure, the assets in court remain attributable to the judgment-debtor until they are rateably distributed and actually disbursed among the decree-holders. The application by the Union of India had been filed before the money was distributed, and later payment to the decree-holder did not affect the maintainability of the application.

Conclusion: The money in court custody had not ceased to be the property of the judgment-debtors on the date of the application, and the application under section 226(4) was maintainable. The issue was decided in favour of the Revenue.

Ratio Decidendi: Money lying in court custody continues to belong to the judgment-debtor until actual distribution, and a tax recovery application under section 226(4) of the Income-tax Act, 1961 can be maintained so long as the money remains undistributed in court.

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