Judgement Appeal (No. 32 of 1937) from a judgment of the High Court (March 3, 1936) upon a reference made under s. 66, sub-ss. 1, 2, of the Indian Income-tax Act (XI of 1922). The reference arose out of an assessment made on the appellants, P. C. Mullick and D. C. Aich, the executors of the estate of one Akshoy Kumar Ghose, for the year 1933-34, on the income of the accounting year ending on March 31, I933- A. K. Ghose died in, October, 1931, and by his will, dated August 3, 1931, he directed in cl. (1.) that "After "my death if I have any debts my said executors and trustees "shall pay up the same out of the income of my property "and on the occasion of my Addya Shradh they shall pay Rs. 10,000 out of the income of my property for expenses in "connection with the Addya Shradh to the person who will "be entitled to perform the Shradh.” In cl. (2.) he directed his executors and trustees to "pay out of the income of my "property the costs of taking out probate of this last "Instrument of Will and of administration of my property." The Income-tax Officer, in assessing the income of the appellants for the year 1932-33, liable to tax for the year 1933-34, at Rs.81,078, had made a deduction of Rs.5537 from the total income as the sum actually expended during the year on the testators "Addya Shradh"; he refused to treat the expenses of probate as an admissible deduction, and made no reduction in respect thereof. The Assistant Commissioner having agreed with the course adopted by the Income-tax Officer in respect of those items, the executors applied to the Commissioner to refer certain questions of law to the High Court. The Assistant Commissioner having agreed with the course adopted by the Income-tax Officer in respect of those items, the executors applied to the Commissioner to refer certain questions of law to the High Court. The following questions were referred — Question 1.—"Whether or not in computing the chargeable income,’ the whole of the amount (Rs.10,000) provided in the will of Akshoy Kumar Ghose as payable out of income on account of his shradh should have been left out of calculation, and not merely the actual amount paid in the year under assessment on account of the same (Rs.5537)?" Supplementary Question.—"Whether in computing the income chargeable to tax in this case, the Income-tax Officer should, on a proper application of the law, have excluded no part of the sum of Rs.10, 000?” Question 2.—" Whether or not the cost of obtaining probate of the will of Akshoy Kumar Ghose should have been excluded from the chargeable income of the assessees, particularly in view of the express provisions in the will that the same shall be payable out of the income?” Question 3.—" Whether or not the assessees were entitled to credit for the full amount of deductions of tax at source on account of securities and dividends, without any abatement in respect of the proportionate amount of charges "allocated to and allowed against the total receipts from such sources ? " The facts appear from the judgment of the Judicial Committee. The High Court (Derbyshire C.J. and Costello J.), in separate concurring judgments, held that no part of the income of the executors applied for expenses in connection with the Addya Shradh should be left out of account in computing the taxable income of the executors, and that no allowance or deduction should be made in respect thereof. They were also of the same opinion with regard to the costs of probate. 1938. Jan. 18, 20. Pugh K.C., and Wallach for the appellants. The principle in Bejoy Singh Dudhuria v. Income-tax Commissioner (( 1933) L. R. 60 I. A. 196.) is applicable to both the expenses of the “Addya Shradh” and the probate costs; they are both diversions of income from the assessees to the persons who are to receive the money. Shradh expenses come out of the estate and are not taxable. [Reference was made to the Indian Income-tax Act (XI. of 1922), s. 4, sub-ss. 1, 3 (1.); ss. Shradh expenses come out of the estate and are not taxable. [Reference was made to the Indian Income-tax Act (XI. of 1922), s. 4, sub-ss. 1, 3 (1.); ss. 6, 14, sub-s. 2; s. 18, sub-ss. 3-5; s. 38, sub-s. 2; and s. 40; and to Forbes v. Secretary of State for India.(( 1914) I. L. R. 42 C. 151.)] Currimbhoy Ebrahim Baronetcy Trustees v. Income-tax Commissioner (( 1934) L. R. 61 I. A. 209.) is totally different from the present case; there the trustees held the property. The sum provided in the will for the payment of the Shradh is exempted from income-tax by s. 4, sub-s.3 (i.), of the Act of 1922. Hubert Hull for the respondent. The payments made by the appellants in connection with the Addya Shradh and as probate duty were an application by them of part of the income coming into their hands. The nature of the obligations in performance of which they expended those sums was not such as to deprive the moneys of their character as income in the hands of the appellants. The principle in Bejoy Singh Dudhuria v. Income-tax Commissioner (( 1933) L. R. 60 I. A. 196.) cannot be applied to this case. [Reference was also made to Indira Rani Ghose v. Akhoy Kumar Ghose.(( 1932) L. R. 59 I. A. 419.)] Pugh K.C. replied. Feb. 1. The judgment of their Lordships was delivered by Lord Russell of Killowen. The executors of a testator (one Akshoy Kumar Ghose, deceased) appeal from a judgment of the High Court of Judicature at Fort William in Bengal, delivered on a reference by the Commissioner of Income-tax under s. 66, sub-ss.1 and 2, of the Indian Income-tax Act. The testator died in October, 1931. By his will he appointed the appellants (and another) his executors. He directed them to pay his debts out of the income of his property, and to pay Rs. 10,000 out of the income of his property on the occasion of his "Addya Shradh" for expenses in connection therewith to the person entitled to perform the Shradh. He also directed his executors to pay out of the income of his property the costs of taking out probate of his will. 10,000 out of the income of his property on the occasion of his "Addya Shradh" for expenses in connection therewith to the person entitled to perform the Shradh. He also directed his executors to pay out of the income of his property the costs of taking out probate of his will. After conferring out of income benefits on his second wife and his daughter, and (out of the estate) benefits on the sons, if any, of his daughter, and after providing for the payment out of income "gradually" of divers sums to some persons, and certain annuities to others, he bequeathed all his remaining property (in the events which happened) to a son taken in adoption after his death by his wife— namely, one Ajit Kumar Ghose, who is still a minor. The title of the son is defeasible in the event of his dying childless during the lifetime of the testators wife, and until he attains the age of twenty-five years the property has to remain in the possession of the executors, who are to defray the expenses of education, maintenance and other necessary expenses out of the income of the estate. By an assessment order, dated October 26, 1933, the executors were assessed to income-tax for the year 1933-34 in respect of their income of the previous year. During that year (namely, 1932-33) the executors had expended a sum of Rs.5537 for expenses in connection with the "Addya Shradh," and a sum of Rs.1,25,000 for probate duty. They had also during the same period made certain payments to the persons entitled under the will to “gradual" payments, and annuities. The Income-tax Officer assessed the income of the appellants for the year 1932-33, liable to tax for the year 1933-34, at Rs.81, 078. He arrived at this figure by the following procedure He ascertained the total taxable income received during the relevant year as amounting to Rs. 1,89,901, and the agricultural income (within the meaning of s. 4, sub-s. 3 (viii.), of the Act) so received at Rs.90,015. He next ascertained the obligations which fell to be discharged by the executors during the year out of the income of the testators estate. These obligations (which he termed “charges") were of different kinds. 1,89,901, and the agricultural income (within the meaning of s. 4, sub-s. 3 (viii.), of the Act) so received at Rs.90,015. He next ascertained the obligations which fell to be discharged by the executors during the year out of the income of the testators estate. These obligations (which he termed “charges") were of different kinds. Some arose under the will of the testators father; others consisted of the annuities payable under the testators will, and of the payments actually made during the year in respect of the sums thereby directed to be paid “gradually." These "charges" he treated (being, as he thought, bound to do so by .the decision in Bejoy Singh Dudhuria v. Income-tax Commissioner (( 1933) L. R. 60 I. A. 196.)) as of such a nature that the moneys required to meet them could not be regarded as income of the appellants. But, since the "charges" were payable out of the whole income whether taxable or not, he apportioned the "charges" between the taxable income and the agricultural income, allocating the sum of Rs.35,520 to the taxable income, with the result that of the said sum of Rs.1,89,901 he treated only the sum of Rs.1,54,381 as income of the appellants. This amount he further reduced by making deductions in respect of the Rs.5537 expended during the year in respect of the testators “Addya Shradh." Certain other adjustments had to be made (chiefly concerned with outgoings in respect of house property) which further reduced the sum of Rs.1, 54,381 to a sum of Rs.1, 22,396. This he fixed as the “total income" of the executors. He then deducted from that total income so much thereof as was represented by interest on securities and dividends taxed at the source, and assessed the executors as liable to pay tax on the balance. He refused to treat the expenses of probate as one of the "charges," the amount of which could not be regarded as income of the executors, and accordingly made no allowance or reduction in respect thereof. On appeal to the Assistant Commissioner the total income liable to tax was reduced to a sum of Rs.59, 344. The reasons for this reduction are immaterial, because upon all the points involved in the present appeal the Assistant Commissioner agreed with the course adopted by the Income-tax Officer. On appeal to the Assistant Commissioner the total income liable to tax was reduced to a sum of Rs.59, 344. The reasons for this reduction are immaterial, because upon all the points involved in the present appeal the Assistant Commissioner agreed with the course adopted by the Income-tax Officer. The executors then applied to the respondent to refer five questions of law to the High Court under s. 66, sub-s.2, of the Act. The respondent, for reasons which need not be specified, only referred three of the questions, but added an additional one on his own motion under s. 66, sub-s. 1. The questions so referred were as follows— Question 1.—" Whether or not in computing the chargeable " income, the whole of the amount (Rs.10,000) provided in the will of Akshoy Kumar Ghose as payable ‘out of income’ on account of his ‘shradh’ should have been left out of calculation, and not merely the actual amount paid in the year of assessment on account of the same (Rs.5537) ? " Supplementary Question.—" Whether in computing the income chargeable to tax in this case, the Income-tax Officer should, on a proper application of the law, have excluded no part of the sum of Rs.10, 000?” Question 2.—" Whether or not the cost of obtaining probate of the will of Akshoy Kumar Ghose should have been excluded from the chargeable ‘income’ of the assessees, particularly in view of the express provisions in the will that the same shall be payable out of the income?” Question 3.—" Whether or not the assessees were entitled to credit for the full amount of deductions of tax at source on account of securities and dividends, without any abatement in respect of the proportionate amount of charges allocated to and allowed against the total receipts from such sources?” The respondent, as provided by s. 66, expressed his own opinion, which was in all respects adverse to the contentions of the executors. Both members of the High Court held as regards question 1 and the supplementary question that no part of the income of the executors applied for expenses in connection with the Addya Shradh should be left out of account in computing the taxable income of the executors, and that no allowance or deduction should be made in respect thereof. Both members of the High Court held as regards question 1 and the supplementary question that no part of the income of the executors applied for expenses in connection with the Addya Shradh should be left out of account in computing the taxable income of the executors, and that no allowance or deduction should be made in respect thereof. As regards question 2, both members of the High Court were of the like opinion as regards the costs of probate. As regards question 3, the Chief Justice thought that the question was one of fact and should not have been referred. Costello J. held that upon the facts when ascertained the executors had no ground for complaint. The third question was accordingly not answered by the High Court. The executors have appealed to His Majesty in Council, and in the course of the argument a point arose which must be dealt with in limine. It was suggested that the assessment should be treated as being not an assessment upon the executors in regard to the income of the executors, but an assessment upon the appellants as trustees (under s. 40 of the Act) for the residuary beneficiary, Ajit Kumar Ghose. In their Lordships opinion this contention is not open to the appellants. The matter has all along proceeded, and been argued by both sides, upon the footing that the assessment was an assessment of executors income. There is no evidence that at the relevant date the estate had been cleared and was held by the appellants simply as trustees, indeed, the indications are all the other way. It is true that the assessment order refers to the infant son as the sole beneficiary. It is also true that in some respects the procedure adopted by the Income-tax Officer is logically more applicable to the ascertainment of residuary income than to the calculation of the total income of an estate, a fact which in all probability is the result of a desire on the part of the authorities to act with fairness to all concerned. But, however that may be, the assessment in its present form stands, subject only to the question which their Lordships have to decide —namely, whether the High Court has correctly answered the questions submitted to it. Their Lordships agree with the answers given to question 1, the supplementary question, and question 2. But, however that may be, the assessment in its present form stands, subject only to the question which their Lordships have to decide —namely, whether the High Court has correctly answered the questions submitted to it. Their Lordships agree with the answers given to question 1, the supplementary question, and question 2. The payment of the Shradh expenses and the costs of probate were payments made out of the income of the estate coming to the hands of the appellants as executors, and in pursuance of an obligation imposed by their testator. It is not a case (like the case of Bejoy Singh Dudhuria v. Income-tax Commissioner (( 1933) L. R. 60 I. A. 196.)) in which a portion of income was by an overriding title diverted from the person who would otherwise have received it. It is simply a case in which the executors, having received the whole income of the estate, apply a portion in a particular way pursuant to the directions of their testator, in whose shoes they stand. As regards question 3, their Lordships think that it might well have been answered in the negative. It appears to have been based upon a misunderstanding by the appellants of the situation. Had they been in fact charged with any tax deducted at source they would have been entitled to credit for that amount; but, in fact, the whole of the sums in respect of interest on securities and dividends which were brought in as gross for the purpose of ascertaining the total income of the executors was deducted for the purpose of fixing the income on which tax was to be charged. They have not been charged with any tax deducted at source. Their Lordships are of opinion that this appeal fails, and should be dismissed. They will humbly advise His Majesty accordingly. The appellants must pay the costs of the appeal.