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TMI Blog1963 (12) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... an assessment upon the Manager of the Court of Wards Estate. It was claimed on behalf of the Government before the income-tax department that Maharani Janki Kuer died without leaving any legal heir and, therefore, the whole estate vested in the State Government by escheat under article 296 of the Constitution. This claim was not either accepted or rejected by the income-tax authorities, but the assessment was made on the Manager, Court of Wards, on the basis that one Suresh Nandan Sinha had filed a suit claiming the estate, alleging himself to be the nearest heir of the deceased, Maharani Saheba, and the question of heirship was sub-judice. The assessment was confirmed by the Appellate Assistant Commissioner on appeal and by the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the Manager, Court of Wards, on the income of the estate arising in the year of account ended March 31, 1956, corresponding to the present assessment. The same view has been held by the Appellate Tribunal which stated as follows: The first and the foremost objection is that the assessment itself is illegal. It was argued that the Bettiah Estate on the death of Maharani Saheba devolved upon the State by escheat, and, therefore, its income was exempt from assessment. The estate has been under the management of the assessee since a long time even during the lifetime of the Maharani Saheba. There was no notification on the death of Maharani Saheba on November 27, 1954, or later that the estate vested in the State by escheat. The q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent is illegal since the Appellate Tribunal has not examined the claim of the Manager of the Court of Wards that the entire estate has escheated to the State of Bihar under article 296 of the Constitution, and, therefore, the income is not chargeable to income-tax under article 289 of the Constitution which states; 289. (1) The property and income of a State shall be exempt from Union taxation. (2) Nothing in clause (1) shall prevent the Union from imposing, or authorising the imposition of, any tax to such extent, if any, as Parliament may by law provide in respect of a trade or business of any kind carried on by, or on behalf of, the Government of a State, or any operations connected therewith, or any property used or occupied f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the income-tax authorities cannot validly impose a tax upon the Manager, Court of Wards, Bettiah Estate, merely because a title suit has been filed with regard to the heirship of the Bettiah Estate without deciding the question as to whether the claim of the State of Bihar that the property has vested in it by escheat is established or not. For these reasons we hold that in the facts and circumstances of this case the assessment made upon the Manager, Court of Wards, Bettiah Estate, in respect of the income of the Bettiah Estate for the assessment year in question is illegal and the first question referred to the High Court by the Income-tax Appellate Tribunal must be answered in favour of the assessee and against the income-tax depart ..... X X X X Extracts X X X X X X X X Extracts X X X X
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