1957 (9) TMI 82 - HC - Income Tax

Summary

Issues Involved:
1. Whether the sum of Rs. 35,807 granted to the assessee was a maintenance allowance exempt under paragraph 15(i) of the Part B States (Taxation Concessions) Order, 1950.

Issue-Wise Detailed Analysis:

1. Nature of the Cash Annuity:
The primary issue was whether the sum of Rs. 35,807 granted to the assessee could be considered a maintenance allowance exempt from income-tax under paragraph 15(i) of the Part B States (Taxation Concessions) Order, 1950. The assessee argued that the entire amount of Rs. 60,000 described as a combined cash allowance in the Resolution constituted her maintenance allowance out of public revenue and hence was exempt from income-tax and super-tax. The Revenue contended that the amount of Rs. 35,807 given as a cash annuity in lieu of the village of Mota Dahisara was not a maintenance allowance and therefore chargeable to income-tax.

2. Interpretation of the Resolution:
The court examined the Resolution passed by the Saurashtra Government on 30th March, 1950, which clearly delineated the cash annuity into two parts: Rs. 35,807 in lieu of the village of Mota Dahisara and Rs. 24,193 as jiwai (maintenance) as Raj Mata. The Resolution stated that the combined cash allowance was payable to the grantee only for her lifetime. The Tribunal had previously viewed the entire amount of Rs. 60,000 as maintenance allowance, but the court found it necessary to look beyond the Resolution and consider the real nature of the transactions leading to the Resolution.

3. Background and Circumstances:
The court reviewed the historical context, including a Royal Resolution dated 26th September, 1947, granting the assessee a monthly jiwai of Rs. 5,000. Subsequently, on 16th March, 1948, the village of Mota Dahisara was granted to the assessee by her son, who had become Maharaja after his father's abdication. The court noted the controversy over whether this grant was a matter of maintenance or a gift. The Revenue argued that the grant of the village was a gift, while the assessee contended it was for maintaining her status and reputation as Raj Mata.

4. Government's Refusal and Subsequent Negotiations:
After the merger of Morvi State into Saurashtra, the Saurashtra Government refused to continue the maintenance allowance and did not recognize the grant of the village. The Maharaja of Morvi wrote to the Rajpramukh of Saurashtra, expressing the difficulties faced by the assessee without her jiwai and village. The Rajpramukh and other officials communicated that the village would be resumed and a cash allowance based on its average revenue would be provided.

5. Analysis of Correspondence and Agreements:
Correspondence between the Maharaja, the Rajpramukh, and other officials revealed that the assessee insisted on retaining the village or receiving an equivalent cash allowance. The Maharaja suggested a compromise where the assessee would receive the income equivalent to the village's revenue plus additional jiwai, totaling Rs. 60,000 per year. This led to the Resolution of 19th June, 1950, which granted Rs. 35,807 in lieu of the village and Rs. 24,193 as jiwai.

6. Tribunal's View and Court's Conclusion:
The Tribunal had concluded that the village was granted for maintaining the assessee's status and reputation, treating it as maintenance. However, the court disagreed, emphasizing that the grant of the village was a bounty and not additional maintenance. The court also noted that the Resolution was a result of mutual agreement between the assessee and the Saurashtra Government, not solely for maintenance purposes.

Final Judgment:
The court concluded that the sum of Rs. 35,807 granted to the assessee was not a maintenance allowance exempt under paragraph 15(i) of the Part B States (Taxation Concessions) Order, 1950. The question was answered accordingly, favoring the Revenue's position.