TaxTMI 
TaxTMI 
Rights and Obligations of executors of Deceased Estates regarding the recovery of taxes : Clause 312(7) of Income Tax Bill, 2025 Vs. Section 169 of Income Tax Act, 1961
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....f certain provisions to executors in the context of tax paid or payable by them. This provision finds its conceptual precursor in Section 169 of the Income Tax Act, 1961, which similarly addresses the rights and obligations of executors regarding the recovery of taxes paid. This commentary undertakes a detailed, item-wise analysis of Clause 312(7) of the Income Tax Bill, 2025, elucidates its objectives, and examines its interplay and comparative features with Section 169 of the Income Tax Act, 1961. The analysis is situated within the broader legislative and policy context, focusing on the evolution of the law, interpretative issues, practical implications, and areas of potential reform. Objective and Purpose The legislative intent behin....
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....e case of an executor in respect of tax paid or payable by him, as they apply in the case of a representative assessee." Breakdown of Clause 312(7) * Reference to Section 305: Clause 312(7) incorporates by reference the provisions of Section 305 of the Income Tax Bill, 2025. Section 305, as per the general scheme of the Bill, is understood to contain provisions analogous to Section 162 of the Income Tax Act, 1961, which provides a representative assessee the right to recover any tax paid on behalf of the person represented. The phrase "so far as may be" indicates that the application is not literal or mechanical, but subject to necessary adaptations to fit the context of executors. * Executor as a Representative Assessee: The sub-cl....
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....tive leeway, which may give rise to disputes regarding the extent to which the procedures and rights u/s 305 apply to executors. For example, issues may arise regarding the priority of the executor's right to recover tax paid vis-`a-vis other liabilities of the estate, or the method of apportionment among beneficiaries. Another area of potential ambiguity is the treatment of situations where the estate is insufficient to meet all liabilities, including tax. While the provision seeks to protect executors, it does not explicitly address the order of payment or the rights of creditors versus the revenue. Practical Implications For Executors Executors are reassured by the statutory right to recover tax paid or payable in their represent....
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....echanism: Both Section 169 and Clause 312(7) operate by reference, incorporating the provisions of another section (Section 162 of the Income Tax Act, 1961; Section 305 in the Income Tax Bill, 2025) to apply to executors. The structure and drafting are almost identical, maintaining continuity in legislative approach. * Substantive Rights: Both provisions confer upon executors the rights and powers of a representative assessee regarding recovery of tax paid on behalf of the estate. The substantive right to indemnity and recovery is preserved. * Scope of Application: Both provisions apply to tax "paid or payable" by the executor, ensuring coverage of both current and future liabilities. * Legislative Evolution: The 2025 Bill moderni....
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....estates. Potential Issues in Interpretation and Application Both provisions use the phrase "so far as may be," which has historically led to interpretative questions regarding the extent and manner of application. Judicial decisions u/s 169 have generally interpreted this phrase to allow for necessary adaptations, but disputes have arisen regarding the executor's right to indemnity, the timing of recovery, and the priority of claims. With the 2025 Bill, unless Section 305 introduces significant changes, similar interpretative challenges are likely to persist. The legislature may consider clarifying these aspects through rules or explanatory notes. Practical Implications Under Both Regimes The practical effect of both Section 169 an....