Leave salary paid to legal heir

Leave salary paid to the legal heir
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Leave salary paid to the legal heir of deceased employee is not taxable as salary. The Act is silent on treatment of leave encashment received after death of employee. However, on following grounds, it can be concluded that leave salary received by a legal heir shall not be taxable in the hands of the recipient -
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a) A lump sum payment made gratuitously to widow or legal heir of employee, who dies while in service, by way of  compensation or otherwise is not taxable under the head 'Salaries'. [Circular No.573, Dated 21.08.1990]
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b) Unutilised deposit under the capital gains deposit account scheme shall not be taxable in the hands of legal heir.  [Circular No.743 dated 6/5/1996 ]
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c) Legal representative is not liable for payment of tax on income that has not accrued to the deceased till his death. 
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d) Leave salary paid to the legal heir of deceased employee is not taxable as salary. [Circulars Letter No. F.35/1/65-IT(B), dated 5/11/19 65 ]. Further, leave salary by a legal heir of the Government employee who died in harness is not taxable in the hands of the recipient [Circulars No.309, dated 3/7/1981 ]. 
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Taxpoint: If leave salary becomes due before the death of the assessee (no matter when and by whom received), it shall be taxable in the hands of employee. Whereas if such salary becomes due after the death of assessee, it shall not be taxable (even in the hands of legal heir of the assessee)
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