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TMI Blog1979 (12) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... t year 1970-71, a return of income was filed on30-4-1970 in the status of an individual. That return is not available. A duplicate of that return was filed on26-3-1970 declaring the status of an individual. A return dated12-2-1971 was filed which was received in the office on19-2-1971. This was termed as revised return and was signed by the legal heir declaring the status of a HUF. The ITO keeping in view the ancestral history of the late Maharaja, the fact of his being the ruler of theJaipurState, the quality of the property and the way he treated the same assigned the status of an individual. In coming to that conclusion, he had taken note of the history of the case the ascension to the gaddi, the factum of the rulership, lapsing of the Paramountancy in 1947, merger in 1949, and the covenants of the same year. He had further taken note of the legal propositions and the alienation of the properties showing his absolute right of disposition. The status assigned by the ITO was challenged before the AAC who tracing the history of the matter and relying on State of U.P. v. Raj Kumar Rukmani Raman Brahma [1970] 2 SCR 355 held that after the merger, the assessee ceased to be the absolut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the document of merger in Vol. II of page 172, article 12 and also invited our attention to the Schedule. He further invited our attention to the pages 21-24 of the same vol. and also page 52. 7. The second proposition is as follows : " From 1922 when the assessee ascended the gaddi till the merger of his State, the assessee was an independent sovereign of the native State ofJaipurhaving full and complete powers of disposition both as regards State properties as well as with respect to what are now specified as personal properties, which were impartible in nature. There is nothing in the history of the rulers of Jaipur to indicate that any other member of the family of the ruler for the time being of Jaipur ; had ever claimed a share in the properties. On the other hand, both as regards State properties and as regards private properties the ruler of Jaipur had absolute and exclusive power of disposition over the properties as well as enjoyment of the income, since he was the sovereign. This was also understood to be so by the assessee during his lifetime even after the merger of his State in Rajasthan. The assessee did not make any distinction between his private properties and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re III Rani Jagadamba Kumari v. Wazir Singh AIR 1923 PC 59. He further relied on a judgment of their Lordships of the Privy Council in the case of Dewan Bahadur Dewan Krishna Kishore. He further relied on Mulla's Hindu Law (14th edn.). 10. His fourth proposition was as follows : Neither the instrument of accession executed by the Maharaja nor the merger agreement between the rulers of various States including Jaipur purported to or in fact did, affect the nature of the ruler's right in relation to private properties. In fact the merger agreement contemplates full ownership of the properties belonging to the ruler. Personal rights were not affected and, therefore, up to the date of the passing of the Hindu Succession Act, 1956, the right which the assessee had in relation to the private properties remained unchanged : 11. It was submitted that the merger agreement was a political document and not a private arrangement and, therefore, the property was the absolute property of the ruler. He invited our attention to the booklet termed as Annexure IV---'Letters collateral to the Government entered between the Government of India, Lt. General, and his Highness Man Singh, Sir Sawai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te and the State properties be was the absolute owner of the property before merger and after merger. He further submitted that if the character of the property changed, it changed only after his death and not during his lifetime. 15. Shri Palkhivala, the learned senior counsel for the assessee, opening the assessee's case submitted that the case laws on which the learned counsel for the revenue relied, relate to the Zamindars who were governed by local laws. But the case before us was not the case of a Zamindar or a Chieftain but of a King who made his own laws and absolute powers. He further submitted that simply because the properties were the absolute properties of the late Maharaja as a ruler and he had the right of exclusive enjoyment like that of a impartible estate, that did not convert the properties of Maharaja into an impartible estate. He further submitted that the properties may have the same characteristics as of an impartible estate but what has to be seen is whether the properties were similar in quality or not. He further submitted that in a case of a self-acquired property, the owner has the right of enjoyment and right to nominate his successor but that does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the case of Accountant General v. CIT [1948] 16 ITR 78 (Bom.). In respect of a judgment of their Lordships of the Federal Court in the case of A.H. Wadia, he submitted that the trading activity of ruler of theGwaliorwas taxed only under the Government Trading Taxation Act and the Indian Income-tax Act, 1922, was not applicable. In respect of a judgment of their Lordships of the Calcutta High Court in the case of Maharaja Bikram Kishore of Tripura he submitted that the rule laid down by their Lordships of the Calcutta High Court was that the ruler was not taxable to Indian Tax Laws. In respect of Accountant-General's case, he submitted that the judgment of their Lordships of the Bombay High Court was to the effect that the sovereign was not subject to Municipal Laws of India and therefore, the taxation laws were not applicable. 18. His fourth proposition was that the impartible estate was abolished by the Land Reforms Act or the Abolition of State and Zamindari Act but it was not so with the State of Jaipur. The King of Jaipur acceded by covenants on terms of equality. He further invited our attention to paragraphs 584 and 584(ii) at page 621 of Mulla's Hindu Law (14th edn.). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of their Lordships of the Supreme Court in the case of CIT v. H.H. Raja of Bhor [1967] 65 ITR 634 where their Lordships of the Supreme Court observed that after the death of the ruler the properties were that of the HUF. In respect of the paper book vols. II and III, he made a passing reference. In respect of vol. IV of the paper book, which was filed by the revenue, he submitted that as all the properties were ancestral and none of them were self-acquired the properties were of the HUF. In respect of the proposition of the revenue detailed above he submitted that the provisions of the Hindu Succession Act were not relevant and he, therefore, did not address us on the alternative arguments raised by him before the AAC. 19. The senior counsel for the revenue in reply reiterated what he had stated earlier and submitted that up to the merger nobody other than the ruler had any control over the property and the quality of that right was not affected by merger. He further submitted that the distinction made out by the learned counsel for the assessee between the kingdom and the impartible estate actually advanced this case. He further submitted that the HUF property was created either ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aja of Jaipur was the holder of the impartible estate, we have to decide as to what is an impartible estate. The consensus of judicial opinion on this issue is that a holder of an impartible estate is an absolute owner of the estate and the mode of succession is determined by the custom being in favour of the rule of premogniture. That being so, we have to decide as to how an impartible estate comes into existence. An impartible estate which is normally ancestral is conferred by a ruler on a person for meritorious services rendered by that person to the overlord, who is the ruler of the State. The holder of the impartible estate derives authority from the overlord and, if we may say so, the impartible estate is held under the pleasure of the overlord. That is why an impartible estate has been treated as Zamindari to which all the laws of the Government are applicable. The most famous Zamindari/impartible estate is that of Maharaja Adhiraj of Dharbhanga to which all the Indian laws were applicable even before the abolition of Zamindari. Bettiah Raj was another Zamindari inBiharand an impartible estate but it was not immune from Indian laws as would be apparent from the innumerable l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... du law but after the merger as he laped into the bosom of the personal law being a Hindu, he constituted a HUF with his legal heirs. In coming to that conclusion, we have taken note of the fact that the ruler did not have any self-acquired property but had only his ancestral property which had come to him through his ancestors and the origin of the ancestral nature of the property is burried in the remote past. 24. At this stage his filing of returns in the status of an individual and dabbling with the properties in the manner he liked without caring for his limitations under the personal law become relevant. It is undoubtedly true that the Ruler filed his returns of income up to the assessment year 1969-70 in the status of an individual and was assessed so. But the question is whether his declaring a status of an individual up to the assessment year 1969-70 could jeopardise claiming of the correct status as assignable under the law. It is also true that the conduct of the assessee is relevant for the purpose of determining the issue of the status but that is not the sole determining factor. An assessee may not be aware of his correct status in law but as and when he knows his co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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