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Issues:
1. Whether the appellant is assessable to income tax and super-tax in respect of an annual sum of Rs. 2,40,000 payable to him during his life pursuant to a covenant contained in the indenture. 2. Whether the annual payment of Rs. 2,40,000 constitutes "agricultural income" within the meaning of the Act. 3. Whether the annual payment should be considered as income or a capital sum for tax purposes. 4. Whether the annual payment constitutes taxable income under the Act. Analysis: 1. The appellant appealed from a judgment of the High Court of Judicature at Patna regarding the assessment of income tax and super-tax on an annual sum of Rs. 2,40,000 payable to him under an indenture. The indenture involved the transfer of the appellant's estate to another party in exchange for the payment of debts, expenses, and a life annuity. The appellant argued against the inclusion of this sum in his assessable income, claiming it was a capital sum and not taxable income. 2. The indenture did not contain a charge on the estate for the annual sums, but the security was provided separately. The appellant contended that the annual payment should not be considered "agricultural income" as it was not derived from land but was a contractual obligation secured by the property. The court concurred that the annual payment did not qualify as agricultural income under the Act. 3. There was a division of opinion among the judges regarding whether the annual payment should be treated as income or a capital sum. The Chief Justice and one judge opined that the sum was income and taxable, while another judge viewed it as part of a capital sum dependent on the appellant's life duration and hence not taxable. The final decision aligned with the former view, considering the annual payments as income in the appellant's hands. 4. The appellant argued that even if the annual payment was income, it should not be taxable under the Act as it did not provide a profit or gain due to the estate's alleged value and his age. However, the court held that the term "income" in the Act was not limited by "profits" or "gains," and the life annuity constituted taxable income as it was a periodical monetary return from a definite source, i.e., the covenant in the indenture. In conclusion, the Privy Council dismissed the appeal, affirming that the annual payment of Rs. 2,40,000 was taxable income under the Act. The judgment clarified that the annual sums were not capital payments but constituted income in the hands of the appellant, subject to taxation.
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