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Issues Involved:
1. Whether the perpetual annuity received as compensation from the State Government is income. 2. Whether the inclusion of 15% of the net income from the trust properties as the assessee's income by way of remuneration was justified. Issue-wise Detailed Analysis: Issue 1: Whether the perpetual annuity received as compensation from the State Government is income. The court examined whether the perpetual annuity received by the trust from the State Government constituted income. The assessee argued that the annuity was compensation for the loss of the trust properties, thus a capital payment. They referenced the Supreme Court decision in Senairam Doongarmall v. CIT, where compensation for the stoppage of business was not considered revenue receipt. However, the court found this argument inapplicable. The trust continued to receive income from the properties, now vested in the State, as per Section 24(1) and (3) of the Bihar Land Reforms Act. The compensation was not for the capital value of assets but was income from the assets now managed by the State. Therefore, the annuity retained its character as income. The court concluded that the perpetual annuity received by the trust is indeed income, answering the first question in the affirmative. Issue 2: Whether the inclusion of 15% of the net income from the trust properties as the assessee's income by way of remuneration was justified. The assessee contested the inclusion of 15% of the net income from the trust properties as their remuneration on two grounds: 1. The method of accounting was on a cash basis, so mere accrual without actual receipt should not be taxed. 2. The right to receive remuneration was relinquished via a deed dated October 5, 1950, and the annuity received was the net income, not allowing further deduction for remuneration. The court did not consider the cash basis accounting argument as it was raised for the first time before the court and involved factual questions not previously addressed. Regarding the relinquishment deed, the court found that the trustee's remuneration was intended to be used for the benefit of the deities, indicating a diversion of income after it accrued to the trustee. Thus, the income remained the trustee's before being allocated as per the deed. Additionally, the court referred to the Bihar Land Reforms Act's explanation in Section 24(3), which allows up to 15% of the net income dedicated to religious or charitable purposes to be paid as remuneration to a trustee. Therefore, the argument that the net annuity did not allow for trustee remuneration was invalid. The court upheld the inclusion of 15% of the net income as the trustee's remuneration, answering the second question in the affirmative. Conclusion: Both questions were answered in the affirmative and against the assessee, with no order as to costs.
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