Estate income taxation turns on actual distribution or benefit to a specific legatee, not mere account crediting.

Section 168(4) of the Income-tax Act applies only to estate income actually distributed to, or applied for the benefit of, a specific legatee during administration of the estate. A residuary legacy is distinct from a specific legacy, and a residuary legatee acquires no right to estate income until administration is complete. Crediting estate income to an executrix's personal account, by itself, does not amount to distribution or application for the benefit of the residuary legatee. Where estate duty remained unpaid and administration was incomplete, the statutory condition for section 168(4) was not satisfied, so the estate income was not assessable in the assessee's individual hands.

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Issues: Whether section 168(4) of the Income-tax Act, 1961 applied to income of an estate credited by the executrix to her personal account where she was only a residuary legatee and administration of the estate was not complete.

Analysis: Section 168(4) excludes from the estate's income only that part which is distributed to, or applied to the benefit of, a specific legatee. A residuary legacy is distinct from a specific legacy. Until the administration of the estate is complete, the residuary legatee has no right to the income of the estate, and the executor or executrix receives the income in his or her own right, not on behalf of the residuary legatee. Mere crediting of estate income into the executrix's personal bank account does not amount to distribution or application for the benefit of the residuary legatee. As the estate duty, which was a first charge on the estate, had not been paid and administration was still incomplete, the statutory condition for section 168(4) was absent.

Conclusion: Section 168(4) did not apply, and the estate income was not assessable in the assessee's individual hands for the assessment years in question.

Ratio Decidendi: Section 168(4) applies only where estate income is actually distributed to, or applied for the benefit of, a specific legatee during administration of the estate, and it does not extend to a residuary legatee before completion of administration.

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