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TMI Blog1968 (8) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... im in British India in the two assessment years 1946-47 and 1947-48 ? " The assessee was the ruler of the erstwhile Faridkot State. He owned Government of India securities which he disposed of through the Lloyds Bank Limited, Simla, and the Grindlays Bank Limited, Lahore, during 1946-47, and realised a profit of Rs. 3,30,505. Notices tinder section 34 were issued by the Income-tax Officer with the previous approval of the Commissioner of Income-tax for the assessment years 1946-47 and 1947-48. In pursuance of the same, the assessee filed returns for the relevant years under protest. The Income-tax Officer proceeded to assess the said profit under section 12B of the Indian Income-tax Act, 1922 (hereinafter referred to as the Act). A number ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ountant Member took the contrary view on this matter and agreed with the Appellate Assistant Commissioner of Income-tax. As there was a difference opinion between the two Members, the matter was placed before the President of the Tribunal. The President agreed with the decision of the Judicial Member mainly on the basis of the decision of the Andhra Pradesh High Court in H. E. H. Mir Osman Ali Khan Bahadur T. Commissioner of Income-tax (Case No. 35 of 1959). The department being dissatisfied with this decision approached the Tribunal under section 66(1) of the Indian Income-tax Act ; and the Tribunal allowed that application and has stated the question of law already set out for our opinion. In our opinion, the matter stands settled by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not a sovereign and, therefore, we cannot, on the basis of the Supreme Court decision, hold that the assessee is not a sovereign vis-a-vis his personal income. In our opinion, that matter is implicit in the question referred. Moreover, questions Nos. (1) and (3) that were referred to the Supreme Court in Commissioner of Income-tax v. H. E. H. Mir Osman Ali Bahadur are, more or less, in the same terms as the question referred to us. Their Lordships of the Supreme Court discussed the matter as to the status of the ruler in that case and ultimately came to the conclusion that the status of an Indian ruler could not be equated with that of a sovereign ; and it was further held that the private income of such a ruler was not exempt from taxation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing terms : " The legal position as we apprehend may be stated thus : Under the Act an individual is assessed to income-tax on the income of the previous year at the rate or rates fixed for the year by the annual Finance Act. The total income of the assessee during the previous year is computed in accordance with the provisions of the Income-tax Act after giving the relevant allowances and deductions therefrom. If during the assessment year an individual is assessable to tax, the fact that during the previous year he was not liable to tax at all because there was no Income-tax Act in the area to which the Act was extended or because that under an Income-tax Act in force therein during that year his income was exempted from tax or becaus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... met, is that in all the cases cited by Mr. Puri, a clear distinction was made between " income from State-owned properties " and " income from personal properties of ruler ". Mr. Puri has been unable to cite a single decision where the income from the personal property of a ruler earned in British India was held to be exempt from the provisions of the Indian Income-tax Act. The last contention of Mr. Puri is that the sovereign status of the assessee could only be decided by the Ministry of Home Affairs, Government of India, and could not be decided by the courts of the country. For this contention, Mr. Puri has placed his reliance on the decisions in Engelke v. Musmann and In re Arantzazu Mondi. If the matter was res integra, one might be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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