COMMISSIONER INCOME-TAX, U. P. versus KUNWAR TRIVIKRAM NARAIN SINGH

Citation: [1965] 3 S.C.R. 700 · Decided: 09-04-1965 · Supreme Court of India · Bench: K. SUBBA RAO · Disposal: Appeal(s) allowed

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Judgment (excerpt)

COMMISSIONER INCOME-TAX, U. P. 
v. 
KUNWAR TRIVIKRAM NARAIN SINGH 
April 9, 1965 
[K. SUBBA RAO, J. c. SHAH AND s. M. Snrn, JJ.] 
focome Tax Act, 1922 (11 of 1922), ss. 2(1)(a) and 4(3) (viii;-
.Agricultural Income-Nature of. 
The respondent was the head oI a Hindu undivided family and 
was the descendant of a J agirdar. Certain disputes between the 
.Jagirdar and the Zamindars in the district had been settled in 1837 
b:Y a compromise between the British Government and the then 
Jagirdar, whereby, the Government granted the Jagirdar and his 
heirs a pension in perpetuity to be calculated on the basi; of one-
fourth of the revenue of the Jagir. By this arrangement the collec-
tions from the Jagir became payable by the Zamindai's direct to the 
Government and the Jagirdar and his successors no longer remained 
the proprietors of the J agir and became entitled only to a pension. 
The Income-tax Officer assessed the receipt of the pension by the 
respondent as part of his regular income and rejected the latter's 
contention that the amount received was agricultural income within 
the meaning of s. 4(3)(:-"iii) of the Income-tax Act, 1922. 
In appeal, the Assistant Commissioner accepted the respondent's 
contention, but the Tribunal reversed this finding. The High Court. 
on a reference. decided the issue in favour of the respondent, on 
the grounds. in:er alia, that the right conferred under the compro-
mise of 1837 was a right to a share of one-fourth in the net land 
revenue collections and furthermore, the amount received by the 
successors of the J agirdar varied from year to year. In the appeal 
before the Su~ .·eme Court, it was also contended on behalf of the 
respondent that the amount received was in the nature of a capital 
receipt, being a payment to the J agirdar and his successors of com-
pensation for relinquishing the title to the J agir lands. 
HELD: (i) Under the compromise and arrangement of 1837, the 
respondent had no interest in the land or in the land revenue payable 
in respect thereof. [704 A] 
. 
State of U.P. v. Kunwar Sri Trivikram Narain Singh, [1962] 
3 .S.C.R 213, followed. 
As the source of the income in this case was the arrangement 
of 1837, the income could not be held to l:e derived from land within: 
the meaning of the definition of agricultural income in s. 2(1)(a) of 
the Act. Even if the income varied from year to year, the source 
of the income was still the arrangement and not land. [705 G] 
Maharajkumar Gopal Saran Narain Singh, v. C.l.T. Bihar and 
Orissa, 3 I.T.R. 237, C.I.T. Bihar and Orissa v. Raja Bahadur Kamkhya 
Narayan Singh and Ors, 16 I.T.R. 325, Mrs. Bacha F. Guzdar v. C.I.T. 
Bo~bau 27, I.TR 1, Maharajadhiraja Sir Kaineshwar Singh, v. 
C.UJ.'. Bihar and Orissa, 41 I.T.R. 169, followed. 
(ii) The amount received by the respondent was not a capital 
receipt but revenue income and therefore taxable. 
700 
A 
B 
•
c 
D 
E 
F 
G 
H 
A 
c.r.T. v. KUNW.AR TRIVIKRAM (Sikri, J.) 
701 
Where an owner of an estate exchanges a capital asset for a per-
petual annuity, it is ordinarily taxable in his hands. The position 
would be different if he exchanged his estate for a capital sum pay-
able in instalments. Such instalments when received would not be 
taxable as income. But in the present case there was no material 
to show that the amount received was an instalment of this nature. 
[706 H-707C] 
B 
Commissioner of Inland 
Revenue v. Wesleyan and General 
Assurance Society, 30 T.C. 11, and Perrin v. Dickson 14 T.C. 608, refer-
red to. 
c 
D 
.E 
.F 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 68 of 1964. 
Appeal from the judgment and decree dated July 27; 1959 of 
the Allahabad High Court in Income-tax Reference No. 307 of 
l 957. 
S. V. Gupte, Solicitor General, R. Ganapathy Iyer and R. N. 
Sachthey, for the appellant. 
A. V. Viswanatha Sastri and S. P. Varma, for the respondent. 
The Judgment of the Court was delivered by 
Sikri, J. This appeal pursuant to a certificate granted by the 
Allahabad High Court under s. 66A(2) of the Income-tax Act 
(hereinafter referred to as the Act) is directed against the judgment 
of the High Court in a. reference under the Act, answering the 
question referred to it in the negative. 
The question referred by 
the Appellate Tribunal is: 
"Whether on a true interpretation of clause (viii) of sub-
section 3 of section 4 of the Indian Income-tax Act 
the sum of Rs. 36,396 /- received by the assessee as an 
allowance during the previ0us year of

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