9911796707
TMI Blog1968 (9) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... the circumstances of the case, having regard to the notification, the sanad and the rules, the mansab received by the assessee, namely, the sum of Rs. 1,07,591, is income liable to assessment under the Income-tax Act ? " The material facts are these: The assessee, Nawabzada Rashiduzzafar Khan, who is now dead and is represented before us by his legal representative, belonged to the royal family of Bhopal. By a sanad dated February 23, 1949, the assessee was granted by the Ruler of Bhopal, a jagir of seventy-two villages having an annual income of Rs. 1,17,745-10 as. The jagir was for the lifetime of the assessee who was to observe all the laws and rules pertaining to jagirs and was subject to eight conditions entered in the sanad. Condit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermanent nature (see paras. 10 and 11) and if rulers issue such instruction ' mansabdar ' will be benefited by the rights and designations. The same principle will be applicable in the matters of the reduceable jagirs also." The assessee applied under this clause for conversion of his jagir into mansab. By a notification of the Chief Commissioner, Bhopal, dated August 11, 1953, issued in exercise of the powers under clause 30(i)(c) the assessee's jagir was converted into ' mansab ' (cash annuity) and he was grant. ed a sum of Rs. 1,07,591-15 as. per year as mansab payable for his life. By the same notification the jagir was taken over by the State. The notification of the Chief Commissioner which also covered other jagirs is as under: N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ------ In accordance with this notification the assessee received the yearly grant of Rs. 1,07,591-15-0. This receipt was assessed to income-tax under section 12 of the Act in the assessment years 1955-56 and 1956-57. But in the assessment proceedings for the year 1957-58 relating to the previous year ending 31st March, 1957, the assessee contended that the receipt of Rs. 1,07,591 was not a receipt of a revenue nature but was in the nature of a capital receipt and was not liable to income-tax. This contention of the assessee was negatived by the Income-tax Officer whose order was upheld in appeal by the Appellate Assistant Commissioner and the Tribunal. On application of the assessee, the Tribunal has referred for our answer the question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may, receive will be taxable ; if, however, it appears from the facts on the true construction of the contract that he has not parted with the money or other asset, but is to receive his capital back in the form of yearly payments, then the payments are not income payments and are not taxable." Having regard to the facts of the instant case and the principles stated above, in our opinion the assessee in this case exchanged his jagir which was a capital asset for a life annuity which was a revenue receipt in his hands. This was not a case where the jagir was exchanged for a capital sum payable in instalments: See Maharaj Kumar Gopal Saran Narain Singh v. Commissioner of Income-tax. The learned Advocate-General, who appeared for the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Abolition of Cash Grants Act (16 of 1963) failed, as that Act was struck down as unconstitutional (State of Madhya Pradesh v. Ranojirao Shinde). The annuity received by the assessee satisfied all the characteristics of income. It was payable with regularity, was recurring in nature and its source was in the Chief Commissioner's notification read with clause 30 of the Order relating to jagirs : See Commissioner of Income-tax v. Shaw Wallace and Company. The sum of Rs. 1,07,591 received by the assessee was, therefore, income liable to assessment under the Income-tax Act. The learned Advocate-General also attempted to argue that the annuity received by the assessee was placed for ten years under the disposal of the Controller of Wakfs by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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