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TMI Blog1966 (9) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... rger of Jind State in the Pepsu Union, the payment was stopped by the Pepsu Government some time in 1949. The assessee then made a representation to the Government of India for continuing the payment year after year according to the practice prevailing in the Jind State. The matter went to the Government of India and on 11th November, 1949, the Government of India sent a letter to the Government of Pepsu, the relevant part of which reads as under : "I am directed to state that the Government of India have carefully considered the views put forward in paragraph 1 of your letter. They are 626 of opinion that all allowances sanctioned by competent authorities in the covenanting State before the date of merger should be continued except where it is established to be unreasonably excessive. The recommendation of the Pepsu Government that the allowances to the married sisters should be totally discontinued is not right. In some States, these allowances had been made in lieu of dowry and in any case they should be honoured as a commitment of the old Rulers. The Government of India have accordingly accepted the Pepsu Government's recommendations subject to the following modifications: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment year in question. The issue which the Tribunal had, therefore, to decide was whether the amount of Rs. 10,000 was revenue income of the assessee liable to tax under the Income-tax Act. The contention advanced on behalf of the assessee was that the amount was not liable to tax because the same had been paid in lieu of dowry and was, therefore, capital receipt and not revenue receipt. According to the assessee, the payment of the dowry was by way of gift and was a voluntary payment and the periodical payments were like the wasting of a capital asset which gradually diminished. The Tribunal as per order dated 27th September, 1960, rejected the assessee's contention and held that the amount of Rs. 10,000 was revenue income liable to tax under the Act. The Tribunal also held that the pay ment of dowry by way of annual allowance was a source of income which was liable to tax. Further according to the Tribunal, the directions contained in the letter of the Pepsu Government were themselves a source from which the assessee could be said to have received the payment year after year, and the receipts could not be treated as of a casual and non-recurring nature. On an application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e observations in the earlier case of Shaw Wallace Co., Lord Wright, speaking for the Board, observed that it was not in their Lordships' opinion correct to regard as an essential element in any of these or like definitions a reference to the analogy of fruit or increase or sowing or reaping of periodical harvests and that such picturesque similes could not be used to limit the true character of income in general. Lord Wright further observed : " Its applicability may, in particular cases, differ because the circumstances, though similar in some respects, may be different in others. Thus the profit realised on a sale of shares may be capital if the seller is an ordinary investor changing his securities, but in some instances at any rate it may be income if the seller of the shares is an investment or an insurance company. Income is not necessarily the recurrent return from a definite source, though it is generally of that character. Income again may consist of a series of separate receipts, as it generally does in the case of professional earnings. The multiplicity of forms which ' income ' may assume is beyond enumeration. Generally, however, the mere fact that the income flow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in H. H. Maharani Shri Vijaykunverba Saheb of Morvi v. Commissioner of Income-tax. In that case the assessee, who was the Maharaja of Morvi, abdicated his gadi in favour of his son in January, 1948. From April, 1949, onwards, his son paid him a monthly allowance. The allowance was not paid under any custom or usage. The allowance could not be regarded as maintenance allowance, as the assessee possessed a large fortune. It was held that as the payments were commenced long after the Ruler had abdicated, they were not made under a legal or contractual obligation. It was further observed that as the allowances were not also made under a custom or usage or as a maintenance allowance, they were not assessable. It would be noticed that in both of the above cases, an express finding was given that the payments, which were made to the assessee in those cases, were not attributable to any custom. In the present case, however, the letters of the Government of India dated 11th November, 1949, and 25th November, 1953, relevant parts of which have been reproduced above, clearly indicate that the Government of India, while directing the payment of the amounts in question, was influenced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch as was done in this case. 5. This was a well-established and well-known, custom. The reasons for it were obvious. The State possessed no vast properties or other revenue-yielding resources which could be utilised for making a marriage settlement, such as a 'dowry', the dictionary meaning of the word 'dowry' being a gift, the estate a woman brings to her husband in marriage. 6. The State possessed no such assets at its free disposal as could be given away as a gift worthy of the dignity of a ruling family or of her husband's family. 8. Thus grew up, and was consistently maintained, the previous Ruler's practice of substituting for a proper dowry a life allowance as the only valuable gift which the girls of the ruling family took with them to the husband's family in addition to the usual wearing apparel, jewellery, cash, presents, etc.... 10. This is what happened in this case when Maharaj Kumari Ruby Rajiber Kaur was married in April, 1945. A substantial dowry was out of question, and a life allowance was given to her to cover the deficiency.... 12. The statements made above are, however, true within my knowledge and belief, acquired during the 8 years of my service in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om of paying the allowance, it reduced the amount, because, in its opinion, it was somewhat excessive. According to section 4 of the Act, the total income of a person includes all income, profits and gains from whatever source derived. The section thus shows that except in cases for which special provision has been made and with which we are not concerned at present, the receipt, in order to be taxable, has to be in the shape of income, profits and gains and that it must emanate from a definite source. So far as the assessee in the present case is concerned, she has her recurring income in the form of allowances of Rs. 10,000 a year, and the source of that income is the direction to the State Government by the Government of India to pay that allowance, because the Government was of the view that there was a custom to pay such allowances and it created a commitment of the old Rulers which should be honoured. The direction of the Government of India was thus based upon the custom and the commitment flowing from it. Another case to which reference has been made on behalf of the assessee is Makesh Anantrai Pattani v. Commissioner of Income-tax. In that case, in January, 1948, the M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It will be noticed that, in both the above cases of the Dewan of Bhavnagar and the managing director of the company, the payments were made in lump sum and were not of a recurring nature and the court on a consideration of the facts of these cases took the payments as a kind of personal gifts. The payment of allowance in the present case is of a recurring nature and it cannot be said that the Government of India, while making the order for the payment of such allowance, was actuated by any consideration of gratitude or personal gift for the assessee. Reference has also been made on behalf of the assessee to the case of Stedeford v. Beloe. In that case, the warden and council of Bradfield College, acting under powers conferred on them by the college statutes, granted the respondent an annual pension of pound 500 from the date of his resignation of the office of headmaster of the college. The statutes empowered the warden and council to apply certain moneys to " such purposes as in their absolute discretion they might deem to be for the benefit of the college, including the payment of any pension or retiring allowance to any person who might have held the office of the headmaste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... English Income-Tax Act by its charging provisions has taxed only those particular types of income which can be brought within the various Schedules, whereas the Indian Income-tax Act has charged whatever is ' income, profits and gains ' on the proper construction of those expressions. It would, in my view, be going altogether too far, on the strength of those words of Viscount Dunedin in the Bradfield College case taken out of their context, to say that nothing whatever can be charged as income under the Indian Income-tax Act which has not an origin in some obligation to pay." With due respect, I express my concurrence with the above observations. A note of caution in relying upon the English Tax cases was also struck by the Judicial Committee in the case of Shaw Wallace and Company, and by the Supreme Court in the case of Commissioner of Income-tax v. Vazir Sultan and Sons. It was observed in the last mentioned case : " While considering the case law, it is necessary to bear in mind that the Indian Income-tax Act is not in pari materia with the British income-tax statutes ; it is less elaborate in many ways, subject to fewer refinements and in arrangement and language it diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taining her status and reputation as mother of the Ruler, i.e., for her maintenance. On a reference, the Bombay High Court held that the sum of Rs. 35,807 was given in lieu of the village and not by way of maintenance, and, therefore, was not exempt under paragraph 15(1)(i). On appeal to the Supreme Court, it was held by their Lordships that the grant of the village was as much by way of maintenance as was the cash allowance called jawai, and that the sum, of Rs. 35,807 was exempt from taxation under paragraph 15(1)(i) of the Part B States (Taxation Concessions) Order, 1950. It would appear from the observations on page 287 of that case that the controversy centred on the point as to whether the grant was by way of maintenance or not. Their Lordships of the Supreme Court took the view that the grant was by way of maintenance and as such was exempt from taxation under paragraph 15(1)(i) of the Part B States (Taxation Concessions) Order, 1950. There arises, however, no consideration in the present case as to whether the allowance granted to the petitioner was by way of maintenance and as such was exempt from taxation under paragraph 15(1)(i) of the Part B States (Taxation Concessions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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