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TMI Blog1985 (8) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... Government of India during the year which ended on 31-3-1976. The assessee explained that this was a payment consequent upon the abolition of privy purse. According to the assessee, this amount was not taxable. The WTO rejected this claim noting that the exemption claimed was not allowable under any of the provisions of section 5 of the Wealth-tax Act, 1957 ('the Act') or under any other statutory provision. The assessee appealed. 3. Before the AAC reliance was placed on article 11 of the Covenant entered into by the rulers of Gwalior, Indore and other States with the Government of India to contend that the above sum of Rs. 3 lakhs was not taxable. This article provided that the ruler of each State shall be entitled to receive annually f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount shall be free of all taxes, whether imposed by the Government of the united State or by the Government of India." "230. Under the terms of the Covenants and agreements of Merger the privy purses of the rulers are to be free from all taxation. The exemption in respect of taxation applies only to the amounts of privy purses and does not extend to any other income of the members of their families. The right of the rulers of this exemption has been accepted because in their own territories the rulers were recognised as sovereigns and were free from all kinds of taxation. This agreement is also covered by article 291 which provides that any sum paid to a ruler as privy purse, which is charged on the consolidated fund of India shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ex gratia payments made by the Central Government consequent upon the abolition of privy purse. This provision was introduced by the Rulers of Indian States (Abolition of Privileges) Act, 1972, with effect from 9-9-1972. This amendment was made well after the enactment of the 1957 Act, and, hence, it could not be said that the Legislature was unaware of the taxability or otherwise of the amounts paid on the abolition of privy purse to wealth-tax. The submission, therefore, is that there was no merit in the assessee's grievance. 6. We have heard the parties. No doubt, the particular article of the Covenant extracted above says that the amount shall be free of all taxes whether imposed by the Government of the United State or by the Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the former rulers from being sovereigns of their States to citizens of the Indian union. If indeed, it had been the intention of the Legislature to exempt the kind of payment in dispute before us, there would have been evidence in the taxing statute itself, of such intention. There is no such evidence available. It is not possible to read any authority for the exemption claimed, either in the Covenant or in the White Paper relied on by the assessee. The passage from A.C. Sampath Iyengar's The Three New Taxes seems to refer to the right to receive an annual amount as privy purse and not to the amounts already received. Hence, it is of no assistance to the assessee. We decline to interfere. 7 to 1 2. [These paras are not reproduced here ..... X X X X Extracts X X X X X X X X Extracts X X X X
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