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4. Aggrieved by the order of the AAC, the assessee went before the Income-tax Appellate Tribunal. It was urged by the assessee before the Tribunal that the deceased was maintaining accounts on cash basis, that though the arrears of professional fees received by the executor are taxable as deemed income in view of Section 176(4) it could be taxed only in the hands of the recipient and not in the hands of the executor, that though the executor as well as the recipient in this case happen to be the same person it does not make the receipt of the professional fees as one received by the executor and that therefore the assessments made on the executor on the arrears of fees received by the legal representative is in violation of Section 176(5) and that under Section 168 of the I.T. Act, only the income of the estate of the deceased in the hands of the executor could be taxed.

6. After due consideration of the above rival contentions, the Tribunal took the view that the arrears of professional fees in respect of' the profession which the deceased carried on till his death constituted part of his estate and, therefore, it can by no stretch of language be called the income of his estate as contemplated in Section 168 and that as such Section 168 cannot be invoked for bringing to tax the arrears of professional fees due to the deceased as income of the estate. On the applicability of Section 176(4), the Tribunal took the view that as per the fiction created thereunder deeming the professional income of the deceased received after his death to be the income of the recipient in the year of receipt, Sri Ratnam who was the recipient of the professional income which was due to the deceased was assessable thereon and that, therefore, the arrears of professional fees are liable to income-tax under Section 176(4) in the hands of Sri V. Ratnam as recipient and not as executor. In this view, the Tribunal held that the inclusion of arrears of professional fees received in the income of the estate and bringing it to tax under Section 168 was not justified and that the said receipt of arrears of professional fees should, however, be taxed as deemed income in the hands of Sri V. Ratnam as a recipient and not as the executor in the year of receipt.

8. It is common ground that Sri A.V. Viswanatha Sastri was carrying on legal profession when he died on January 4, 1966, after executing a will on January 2, 1966, appointing his son, Sri V. Ratnam, to be the executor of the will and that the latter as executor has collected the arrears of professional fees due to the deceased after his death for all the four assessment years in question. On these admitted facts the only point that arises for consideration is under what provision of the I. T. Act, the receipt of professional fees by Sri V. Ratnam is assessable. The ITO proceeded on the basis that the combined operation of the provisions of Sections 168 and 176(4) makes the executor liable in respect of, (1) income of the estate which came into his hands, and (2) any sum received by the executor after the discontinuance of profession by reason of the death of the person concerned or otherwise and that, in this case, the executor having received income of the estate as well as the professional fees due to the deceased both are assessable in his hands and that the professional fees received after the death of the deceased need not be separately assessed in his hands and it is only on that basis that the legal fees received was assessed under the head "Profession". The AAC upheld the assessment on the reasoning that such professional fees received should be deemed to be the income of the estate and charged to tax if such sum could have been included in the total income of the deceased had it been received before his death and that as the executor received the arrears of professional fees as also other income from the estate of the deceased, the ITO was justified in clubbing the arrears of professional fees with the other income from the estate of the deceased in the hands of the executor. The Tribunal, however, had taken the view that Section 168 will not apply to the facts of this case as the arrears of professional fees due to the deceased cannot be taken to be the income from the estate of the deceased and that the arrears of income if at all can be assessed only in the hands of Sri V. Ratnam under Section 176(4) separately as the recipient and not as an executor. According to the Tribunal, under Section 168 only the income from the estate could be charged to tax in the hands of the executor and not the arrears of income due to the deceased which automatically becomes part of the estate. As regards the application of Section 176(4), the Tribunal is of the view that it should have operation independent of Section 168 and that under Section 176(4) it is only the recipient who can be taxed in respect of the receipt of professional fees due to the deceased if such receipt would have been included in the total income of the deceased had it been received before his death. The question is whether the Tribunal's view that the receipt of professional income of the deceased should not be included in the income of the estate of the deceased under Section 168 could be sustained.

17. Admittedly, in this case, the arrears of fees realised by the executor has been treated as professional income and on the day when the assessment was made, admittedly the profession no longer continued. Therefore, even assuming that the executor can be assessed as a recipient under Section 176(4) in this case, the executor cannot be taken to have been validly assessed under the head "Professional fees". On the scope of Section 176(4), we are of the view that even if Section 176(4) treats the recipient as a taxable entity irrespective of the question whether there is a will or whether the recipient is an executor or not, the amount of arrears of fees due to the deceased has to be treated as the income of the recipient and cannot be taken to be an income of the estate of the deceased, and that, therefore, it has been rightly held by the Tribunal that Section 168 may not apply to a situation as in this case. As per Section 176(4) where any profession is discontinued in any year on account of the cessation of the profession by, or the retirement or death of, the person carrying on the profession, any sum received after the discontinuance shall be deemed to be the income of the recipient and charged to tax accordingly in the year of receipt, if such sum would have been included in the total income of the aforesaid person had it been received before such discontinuance. As per the aforesaid provision, where any profession is discontinued as a result of the cessation of the profession by, or the retirement or death of, the person carrying on the profession, any sum received after the discontinuance shall be, though in fact is not the income of the recipient, deemed to be the income of the recipient and charged to tax as his income in the year of receipt if such sum would have been included in the total income of the person, who carried on the profession, if it was received by him before such discontinuance. A fiction is created by law under the aforesaid provision. As per the said fiction, the executor, viz., Sri Ratnam, is the recipient of the arrears of professional income, which was duo to Sri A.V. Viswanatha Sastri and which were assessable to income-tax, if he had received them before he died. It is, therefore, clear that the arrears of professional fees are liable to income-tax under Section 176(4) in the hands of the recipient, viz., Sri V. Ratnam, as his income and chargeable to tax as his income as income from other sources in the year of receipt. The arrears of fees realised by Sri V. Ratnam will have to be taxed in his hands as a recipient in the year of receipt and cannot be tacked on and clubbed with the income of the estate of the deceased and brought to tax in the hands of the executor along with the income of the estate. In this view of the matter, the question referred to us is answered in favour of the assessee. The reference is ordered accordingly. There will be no order as to costs.