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Issues:
1. Interpretation of the proviso to section 3(1) of the Expenditure-tax Act, 1957. 2. Determining whether a specific amount received by the assessee constitutes income for the purpose of expenditure-tax assessment. Analysis: The judgment by the High Court of Rajasthan involved a reference by the Income-tax Appellate Tribunal regarding the interpretation of the proviso to section 3(1) of the Expenditure-tax Act, 1957. The main issue was whether the assessee was entitled to exemption from expenditure-tax for the assessment year 1958-59 based on the proviso's conditions. The proviso stated that no expenditure-tax shall be payable if the assessee's income from all sources, reduced by taxes payable under other laws, does not exceed a specified amount. The court examined the definition of "income" in the context of the Act, citing a Privy Council judgment to emphasize that income signifies a periodical monetary return from definite sources. The court reiterated that the income determined in income-tax proceedings is crucial for expenditure-tax assessment. Regarding the specific amount received by the assessee, which was compensation for surrendering certain privileges under the Land Reforms and Resumption of Jagirs Act, the court determined that it constituted a capital receipt and was rightly excluded from the assessee's income for income-tax purposes. As a result, the assessee's total income fell below the threshold specified in the proviso, making them exempt from expenditure-tax for the relevant assessment year. The court concluded in favor of the assessee, stating that the proviso applied to their case, and they were not liable to pay expenditure-tax for the year in question. The judgment highlighted the importance of correctly interpreting the term "income" and considering the specific circumstances of receipts to determine tax liability accurately.
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