9911796707
TMI Blog1970 (7) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to as " the Act "). The reference has been made at the instance of Maharaja Vibhuti Narain Singh of Varanasi (hereinafter referred to as " the assessee "). The statement of the case submitted by the Tribunal relates to the assessment years 1957-58 and 1959-60, the corresponding period being the 31st March, 1957, and the 31st March, 1958. The material facts bearing on this reference are as follows: The assessee was previously the ruler of a Native State called the Banaras State. On 5th September, 1949, there was an agreement between the Governor-General of India and the assessee. India at that time enjoyed dominion status under the British Crown. Article I of that agreement, extracts from which have been annexed to the statement of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er his authority during the period of his administration of that State and it also reserves to him certain other privileges The agreement of merger was signed by Mr. V. P. Menon, Adviser to the Government of India in the Ministry of State, on behalf of the Governor-General of India and also by the assessee. There is no dispute that the agreement of merger is binding on both the parties. The above agreement dated 5th September, 1949, was followed by a letter written by the said Sri V. P. Menon to the assessee conveying certain assurances on behalf of the Government of India. Paragraph 3 of this letter runs as follows : " 3. The gaddi of the Maharaja shall continue at Fort Ramnagar and the Fort and its appurtenances and Your Highness' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in section 5 of the Wealth-tax Act. It was stated that the claim was founded on the agreement for merger dated 5th September, 1949, between the assessee and the Governor-General of India, as clarified by the letter written by Sri V. P. Menon to the assessee which formed part of the agreement. It was pointed out that according to paragraph 3 of that letter the assessee would continue as hitherto, to be exempt from " all property or other municipal taxation. " It was urged that the wealth-tax is a tax on property and it was, therefore, covered by paragraph 3 of the aforesaid letter. It was also contended that, at all events, the words " other municipal taxation " in paragraph 3 of the letter should be construed by the rule of ejusdem gener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee in regard to "Nandeswar House". Aggrieved by the decision of the Tribunal the assessee had made this reference on the following question of law : "Whether, on the facts and in the circumstances of the case, the value of 'Nandeswar Palace' was rightly included in the net wealth of the assessee for the assessment years 1957-58 and 1958-59 ?" A similar matter came up for consideration of a Full Bench of this court in the case of Commissioner of Income-tax v. Nawab of Rampur. The facts in that case were that the Nawab of Rampur was the ruler of the former State of Rampur. Since 1944, the Rampur Income-tax Act, 1944, was in force in that State, and under section 3A of that Act, the Act was not to apply to the Nawab. By an agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rger agreement was no law and could not, therefore, be enforced in a court of law or by the Tribunal. It was further held that even assuming that there was immunity and that it had been continued up to the merger, it was not for the Tribunal or the court to give effect to that and to hold that the Nawab was exempt from taxation. Following the decision of the Full Bench, we hold that the terms of the agreement of merger, read with the letter of assurance, cannot be regarded as law in force either by the Tribunal or by this court. So far as the taxability of an asset under the Act is concerned, only such exemptions could be allowed as have been mentioned in section 5 of the Act. It has been already seen that under section 5(1)(iii), the ruler ..... X X X X Extracts X X X X X X X X Extracts X X X X
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