1931 (7) TMI 20 - HC - Income Tax

Summary

Issues:
1. Taxability of the sums received from the Colonial Bishopric Fund as income under Section 3 of the Indian Income Tax Act.
2. Determination of whether the income arising from the fund is sourced in British India.
3. Classification of the income received as either "salaries" under Section 7(1) or "other sources" under Section 12(1) of the Act.

Analysis:
1. The Lord Bishop of Lucknow received an annual allowance from the Colonial Bishopric Fund, which was acknowledged as income under Section 3 of the Income Tax Act. This acknowledgment was made by the assessee's counsel, thereby settling the first question in favor of taxability.

2. The crucial issue was whether the income arising from the fund had its source in British India. The court determined that the income accrued or arose in British India due to the Lord Bishop's position in the country. The income was deemed to spring up or come into action in India, making it taxable in British India, even though physically received in London.

3. Regarding the classification of the income, the court found that the allowance received by the Lord Bishop was attributable to his position as the Lord Bishop of Lucknow, falling under the definition of "salaries" as per Section 7(1) of the Act. The income was considered a perquisite attached to his office, making it taxable under the head of "salaries" rather than "other sources."

In conclusion, the judgment upheld the taxability of the income received from the Colonial Bishopric Fund as per Section 3 of the Income Tax Act. It established that the income sourced from the fund accrued or arose in British India due to the Lord Bishop's position, and classified the income as a perquisite under the head of "salaries" for taxation purposes. The court directed the Commissioner of Income Tax to receive a copy of the judgment, with costs to be borne by the assessee.