My father died and, years later, his firm's old fees kept coming in to us. Can the department tax those receipts as his income in our hands?
No, on the law as it then stood. The Supreme Court held that the provision making a legal representative liable for a deceased person's tax extends the deceased's legal personality only for the previous year in which he died. Income received by his heirs after the end of that previous year is not income received by him and cannot be assessed in their hands under that provision. Amarchand died on 7 July 1949; realisations of the firm's old outstandings received in the five assessment years 1950-51 to 1954-55 were therefore not taxable as his income. A legal fiction is limited to the purpose for which it was created.
Decided by the Supreme Court (Supreme Court of India - J.L. Kapur, M. Hidayatullah and J.C. Shah, JJ (judgment delivered by Kapur, J)) on 1962-10-10, reported as 1963 AIR 1448; 1963 SCR Supl. (1) 699. It bears on section 24B of the Indian Income-tax Act, 1922, section 34(1)(b) of the Indian Income-tax Act, 1922, section 159, section 168, section 176 of the Income Tax Act 1961, in Assessment & Scrutiny matters.
This is the leading statement of two connected propositions. Apart from the special provision, no assessment can be made on the income of a person after his death, because an assessee has ordinarily to be a living person and legal personality ceases on death - the point made in Ellis C. Reid, whose observation that the privilege of immortality is not among those conferred by paying income tax the Court sets out. And the fiction which fills that gap is limited to what it was enacted for: it carries the deceased forward through the previous year in which he died, and no further. Practitioners use it as the standard authority on the confinement of deeming provisions. Note that the treatment of sums received after a business or profession is discontinued has since been dealt with expressly, so check the current provisions.
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Amarchand, Mangaldas and Hiralal were partners in a firm of solicitors keeping accounts on a cash basis. Amarchand died on 7 July 1949. Mangaldas and Hiralal carried on the firm until 30 November 1949, and on 1 December 1949 Amarchand's son Ramesh, by then qualified as a solicitor, joined as the third partner. The partners agreed that realisations for work done up to Amarchand's death would be divided among Amarchand, Mangaldas and Hiralal; realisations for work done between 8 July and 30 November 1949 between Mangaldas and Hiralal; and realisations for work done after 1 December 1949 among the three then partners. In the five assessment years 1950-51 to 1954-55 Amarchand's heirs received Rs 37,847, Rs 43,162, Rs 34,899, Rs 13,402 and Rs 32,523 out of the old outstandings. The Income-tax Officer first assessed the first two years' amounts in the hands of the heirs as a Hindu undivided family; the Tribunal held they were not the family's income but represented inheritance or realisations of Amarchand's assets, and the Revenue did not pursue that further. Later, proceedings were begun under section 34 against 'Amarchand N. Shroff by his heirs and legal representatives', treated as an individual, and all five years were assessed under section 34(1)(b) read with section 24B. The Appellate Assistant Commissioner held the notice valid only for 1950-51 and quashed the rest; the Tribunal held section 24B had no application at all to income received after the death. The Bombay High Court answered the reference against the Commissioner.
The appeals were dismissed with costs and the High Court's negative answer upheld. The three sub-sections of section 24B must be read together. The first divides into cases where the deceased's income was assessed before his death and cases where it was not assessed but would have been liable to tax had he not died; the second and third deal with death before publication of the general notice or service of an individual notice, and death before or after furnishing a return. Read together, the words 'or any tax which would have been payable by him under this Act if he had not died' are confined to income received by the deceased before his death, and to income received after his death by his heirs but within the previous year, which had not been assessed but would have been assessed as his income had he lived. The section does not authorise a levy on receipts by legal representatives in assessment years succeeding the year of account in which the person died, and its provisions do not extend the estate's liability beyond that previous year. Apart from section 24B no assessment can be made in respect of the income of a person after his death.
The Court reasoned from the nature of the charge and from the purpose of the provision. Income tax is charged on a person's total income of the previous year, and an assessee has ordinarily to be a living person, legal personality ceasing at death; the section was enacted to fill the lacuna pointed out in Ellis C. Reid, where the Bombay High Court had observed that the Act nowhere referred to the death of the person charged and that whatever privileges the payment of income tax confers, the privilege of immortality is not among them. What section 24B does, therefore, is to extend the deceased's legal personality for the duration of the previous year in which he died, so that income received by him before death and by his heirs after death but within that year is assessable in the relevant assessment year. Income received in a year after that previous year cannot be called income received by the deceased at all. The Court then applied the rule stated in Bengal Immunity that legal fictions exist for a definite purpose, are limited to that purpose, and are not to be extended beyond their legitimate field. It distinguished the authorities relied on for the Revenue: E. Alfred contained nothing to the contrary; B.M. Kamdar concerned a consulting engineer who was alive when he received his outstanding fees, so section 24B did not arise; and in Usharani Choudhurani the commission was earned by the deceased and received by his widow within the previous year, which is precisely the case the section covers.
The provisions of s. 24B do not extend to tax liability of the estate of a deceased person beyond the previous or the account year in which that person dies.
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Handle my notice → Ask a CA on WhatsAppNo, on the law as it then stood. The Supreme Court held that the provision making a legal representative liable for a deceased person's tax extends the deceased's legal personality only for the previous year in which he died. Income received by his heirs after the end of that previous year is not income received by him and cannot be assessed in their hands under that provision. Amarchand died on 7 July 1949; realisations of the firm's old outstandings received in the five assessment years 1950-51 to 1954-55 were therefore not taxable as his income. A legal fiction is limited to the purpose for which it was created. This was decided by the Supreme Court (Supreme Court of India - J.L. Kapur, M. Hidayatullah and J.C. Shah, JJ (judgment delivered by Kapur, J)) and bears on section 24B of the Indian Income-tax Act, 1922, section 34(1)(b) of the Indian Income-tax Act, 1922, section 159, section 168, section 176 of the Income Tax Act 1961. It is reported as 1963 AIR 1448; 1963 SCR Supl. (1) 699. This is the leading statement of two connected propositions. Apart from the special provision, no assessment can be made on the income of a person after his death, because an assessee has ordinarily to be a living person and legal personality ceases on death - the point made in Ellis C. Reid, whose observation that the privilege of immortality is not among those conferred by paying income tax the Court sets out. And the fiction which fills that gap is limited to what it was enacted for: it carries the deceased forward through the previous year in which he died, and no further. Practitioners use it as the standard authority on the confinement of deeming provisions. Note that the treatment of sums received after a business or profession is discontinued has since been dealt with expressly, so check the current provisions. If it applies to you, the first step is this: Identify the previous year in which the death occurred and separate receipts falling inside it from those falling after; the line the Court drew is a hard one.
Amarchand, Mangaldas and Hiralal were partners in a firm of solicitors keeping accounts on a cash basis. Amarchand died on 7 July 1949. Mangaldas and Hiralal carried on the firm until 30 November 1949, and on 1 December 1949 Amarchand's son Ramesh, by then qualified as a solicitor, joined as the third partner. The partners agreed that realisations for work done up to Amarchand's death would be divided among Amarchand, Mangaldas and Hiralal; realisations for work done between 8 July and 30 November 1949 between Mangaldas and Hiralal; and realisations for work done after 1 December 1949 among the three then partners. In the five assessment years 1950-51 to 1954-55 Amarchand's heirs received Rs 37,847, Rs 43,162, Rs 34,899, Rs 13,402 and Rs 32,523 out of the old outstandings. The Income-tax Officer first assessed the first two years' amounts in the hands of the heirs as a Hindu undivided family; the Tribunal held they were not the family's income but represented inheritance or realisations of Amarchand's assets, and the Revenue did not pursue that further. Later, proceedings were begun under section 34 against 'Amarchand N. Shroff by his heirs and legal representatives', treated as an individual, and all five years were assessed under section 34(1)(b) read with section 24B. The Appellate Assistant Commissioner held the notice valid only for 1950-51 and quashed the rest; the Tribunal held section 24B had no application at all to income received after the death. The Bombay High Court answered the reference against the Commissioner. The matter was decided on 1962-10-10 by the Supreme Court (Supreme Court of India - J.L. Kapur, M. Hidayatullah and J.C. Shah, JJ (judgment delivered by Kapur, J)). On those facts the Supreme Court held as follows. The appeals were dismissed with costs and the High Court's negative answer upheld. The three sub-sections of section 24B must be read together. The first divides into cases where the deceased's income was assessed before his death and cases where it was not assessed but would have been liable to tax had he not died; the second and third deal with death before publication of the general notice or service of an individual notice, and death before or after furnishing a return. Read together, the words 'or any tax which would have been payable by him under this Act if he had not died' are confined to income received by the deceased before his death, and to income received after his death by his heirs but within the previous year, which had not been assessed but would have been assessed as his income had he lived. The section does not authorise a levy on receipts by legal representatives in assessment years succeeding the year of account in which the person died, and its provisions do not extend the estate's liability beyond that previous year. Apart from section 24B no assessment can be made in respect of the income of a person after his death.
The Court reasoned from the nature of the charge and from the purpose of the provision. Income tax is charged on a person's total income of the previous year, and an assessee has ordinarily to be a living person, legal personality ceasing at death; the section was enacted to fill the lacuna pointed out in Ellis C. Reid, where the Bombay High Court had observed that the Act nowhere referred to the death of the person charged and that whatever privileges the payment of income tax confers, the privilege of immortality is not among them. What section 24B does, therefore, is to extend the deceased's legal personality for the duration of the previous year in which he died, so that income received by him before death and by his heirs after death but within that year is assessable in the relevant assessment year. Income received in a year after that previous year cannot be called income received by the deceased at all. The Court then applied the rule stated in Bengal Immunity that legal fictions exist for a definite purpose, are limited to that purpose, and are not to be extended beyond their legitimate field. It distinguished the authorities relied on for the Revenue: E. Alfred contained nothing to the contrary; B.M. Kamdar concerned a consulting engineer who was alive when he received his outstanding fees, so section 24B did not arise; and in Usharani Choudhurani the commission was earned by the deceased and received by his widow within the previous year, which is precisely the case the section covers. In the words reproduced by the source cited on this page: "The provisions of s. 24B do not extend to tax liability of the estate of a deceased person beyond the previous or the account year in which that person dies."
It was decided by the Supreme Court on 1962-10-10 and is reported as 1963 AIR 1448; 1963 SCR Supl. (1) 699. Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section 24B of the Indian Income-tax Act, 1922, section 34(1)(b) of the Indian Income-tax Act, 1922, section 159, section 168, section 176, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeals were dismissed with costs and the High Court's negative answer upheld. The three sub-sections of section 24B must be read together. The first divides into cases where the deceased's income was assessed before his death and cases where it was not assessed but would have been liable to tax had he not died; the second and third deal with death before publication of the general notice or service of an individual notice, and death before or after furnishing a return. Read together, the words 'or any tax which would have been payable by him under this Act if he had not died' are confined to income received by the deceased before his death, and to income received after his death by his heirs but within the previous year, which had not been assessed but would have been assessed as his income had he lived. The section does not authorise a levy on receipts by legal representatives in assessment years succeeding the year of account in which the person died, and its provisions do not extend the estate's liability beyond that previous year. Apart from section 24B no assessment can be made in respect of the income of a person after his death. It arises in Assessment & Scrutiny matters, on section 24B of the Indian Income-tax Act, 1922, section 34(1)(b) of the Indian Income-tax Act, 1922, section 159, section 168, section 176 of the Income Tax Act 1961, and was decided by Supreme Court of India - J.L. Kapur, M. Hidayatullah and J.C. Shah, JJ (judgment delivered by Kapur, J). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Where a deeming provision is invoked against you, ask what purpose it was enacted for and hold the Revenue to that purpose; this is the case for the proposition that a fiction cannot be stretched. Check the current provisions on sums received after discontinuance of a business or profession, and on the assessment of a deceased person's income, before assuming this result still follows. Keep the method of accounting in view - the firm here was on a cash basis, which is why the receipts fell into later years at all.
Still good law. The judgment construes section 24B of the Indian Income-tax Act, 1922. A citator search restricted to the Supreme Court returns fourteen decisions. One of them was read: CIT, Madhya Pradesh v. Hukamchand Mohanlal, Civil Appeal No. 2421 of 1968, decided 17 September 1971, in which the Court followed this judgment's holding on section 24B as part of its own reasoning and dismissed the Revenue's appeal. The general proposition that a legal fiction is confined to the purpose for which it is created continues to be applied in the Supreme Court, the citator showing it carried into decisions as recent as Adani Gas Ltd. v. Union of India (28 September 2021) and New Okhla Industrial Development Authority v. Yunus (3 February 2022), though those two were not read. Nothing overruling or doubting the judgment was found. The two propositions that a fiction is confined to its purpose, and that no assessment lies on the income of a dead person apart from statute, are unaffected. The result on post-death receipts is a different matter: the 1961 Act contains provisions on sums received after the discontinuance of a business or profession which have been added to since and which were not before the Court, so that result must be checked against those provisions as they stood in the years in hand before it is relied on. The Income-tax Act, 2025 does not close the judgment off for those years: section 536 of that Act saves the Income-tax Act, 1961 for every tax year beginning before 1 April 2026, and this library is written against the 1961 Act and governs assessment years up to and including AY 2026-27, so a judgment on the 1961 Act is not displaced by the new Act for those years. For years from AY 2027-28 the charge on post-discontinuance receipts, and the assessment of a deceased person's income, have to be taken from the 2025 Act instead. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Decided under the Indian Income-tax Act, 1922 on section 24B, with the reassessment under section 34(1)(b); the batch line's sections 159, 168 and 176 of the 1961 Act are where the ground is covered today but were not construed. The Court did not decide in whose hands, if anyone's, these receipts were taxable - the Tribunal had earlier held they were not the income of the Hindu undivided family and represented inheritance or realisation of assets, and the Revenue did not pursue that, and the Tribunal in the present round also described them as capital receipts, a characterisation the Court did not adopt or reject. Nor did it decide the validity of the section 34 notices beyond the first year, that having been decided below. The harvested page gives the date of judgment as 10 October 1962 in its heading but records the judgment as delivered on 23 October 1962; the heading date has been used. The reporter's headnote on the page has been ignored. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeals were dismissed with costs and the High Court's negative answer upheld. The three sub-sections of section 24B must be read together. The first divides into cases where the deceased's income was assessed before his death and cases where it was not assessed but would have been liable to tax had he not died; the second and third deal with death before publication of the general notice or service of an individual notice, and death before or after furnishing a return. Read together, the words 'or any tax which would have been payable by him under this Act if he had not died' are confined to income received by the deceased before his death, and to income received after his death by his heirs but within the previous year, which had not been assessed but would have been assessed as his income had he lived. The section does not authorise a levy on receipts by legal representatives in assessment years succeeding the year of account in which the person died, and its provisions do not extend the estate's liability beyond that previous year. Apart from section 24B no assessment can be made in respect of the income of a person after his death.
TaxSphere, “CIT v Amarchand N. Shroff”, https://taxnotice.vittsphere.com/caselaw/case/cit-v-amarchand-n-shroff/ (validity last checked 2026-09-16)
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I was an advocate on cash basis and stopped practising when I was appointed to the Bench. Fees for old work are still coming in. The Assessing Officer says section 176(4) makes them taxable. Is there an answer?
I stopped practising only because I was appointed a judge, and I went back to the Bar when I retired. Surely that is a suspension and not a discontinuance, so section 176(4) cannot apply to fees I received while I was on the Bench?
I shut my consultancy two years ago and money is still coming in for work I did before I closed. My accountant says section 176 taxes it. Which sub-section does that, what notice was I supposed to give when I closed, and how much time did I have?
The sole proprietor died while a demand was pending. Can the department carry on the assessment against his widow and daughters?
