Legal Status of Estate of a deceased individual

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CA Mandar Joshi (Querist)
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18 July 2011 Dear Experts,

After the demise of an individual, his/her return is filed as Estate of the Individual. Under what status does this estate of deceased individual will be shown. Will it be AOP or will it be Artificial Juridical Person?

Please answer ASAP

CA MANOJ GUPTA

CA MANOJ GUPTA (Expert)
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19 July 2011 GENERALLY IN CASE OF INDL THE INCOME IS ASSESSED IN THE HANDS OF LR AND THEY ARE TREATED AS INDLS FOR ASSESSMENT PURPOSES
IF ANY EXECUTOR IS APPOINTED THEN IF THERE IS ONE EXECUTOR THEN INCOME WILL ASSESSED IN THE STAUTS OF INDL AND IF MORE THAN ONE EXECUTYOR IS APPLOINTED THEN INCOME IS TAXED IN HANDS OF AOP

Section 159 of the Income Tax Act, 1961 comes in operation only when the original assessee dies. According to this section where a person dies, his legal representative shall be liable to pay any sum which the deceased would have been liable to pay if he had not died, in the like manner and to the same extent as the deceased. However, liability of legal representative for payment of tax is only in respect of the income of deceased. It was pointed out in Addl. ITO v. Suseela Sadanandan (1965) 57 ITR 168 (SC) by the Apex Court that where a person dies executing a will, appointing one or more executors or dies intestate leaving behind him more than one heir, the assessing officer should proceed to assess the total income of the deceased against all the executors or the legal representatives, as the case may be.
Liability of legal representative for payment of tax is only in respect of the income of the deceased. The legal representative should not be assessed separately. In other words his individual assessment should not be mixed with the assessment as legal representative. Consequently, all reliefs, deductions and allowances will have to be allowed to the representative assessee and the rate of tax will be that applicable to the deceased in respect of the assessment year relevant to the previous year in which he died.

CA MANOJ GUPTA
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