LexRAJA RAMESWARA RAO versus COMMISSIONER OF INCOME-TAX, HYDERABAD
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
2 S.C.R.
SUPREME COURT REPORTS
847
RAJ A RAMESW ARA RAO
v.
COMMISSIONER OF INCOME-TAX,
HYDERABAD
(S. K. DAS, A. K. SARKAR, K. N. WANCHOO
and K. C. DAS GUPTA JJ.)
Income Tax-Interim maintenanoe allowances and com-
mutation Bum-Distinctinn-lnterim maintenance allowances,
whether income or
capital-flyderabad (Abolition of Jagirs)
Regulation, 1358F-Hyderabad Jagirs (Commutation) Regula-
tion, J359F-Income-tax Act, 1922 (11 of 1922).
·
The Hyderabad (Abolition of Jagirs) Regulation, l 358F,
which abolished Jagirs, provided by s. 14 that the amount
payable to the J agirdars under the Regulation "shall he deemed
to be interim maintenance allowances payable until such time
as the terms of the commutation
for thejagirs are deter-
mined." The Hyderabad .Jagirs (Commutation) Regulation,
1359F, bys. 3 laid down that commutation sum for a .Jagir
would be a certain multiple of its basic annual revenue and by
s. 6, tlut the commutation sum for each Jagir would be
distribut1ble between the Jagirdar and Hissedars in certain
proportions.
Sub-section (2) of s. 7 of the latter Regulation
stated that "payment to a Jagirdar ...... of. ..... the commu-
tation sum of theJa~ir shall constitute the final commutation
as from the !st April 1950, of his rights in the Jagir and if
any· payment by way
of an interim maintenance allowance
under the said Regulation," that is, the Regulation of J3j8F.,
"is made in respect of a period ...•.. subsequent to the said
date, the, amount of such payment .... shalJ be recovered from
the recipient thereof by deduction from .... his share in the
commutation sum for the Jagir."
He"ld
that the interim maintenance allowances paid
under s. 14 of the earlier Regulation in respect of a period
prior to April I, .1950, were revenue receipts on which income.
tax can be imposed. They were intended to be quite distinct
from the con1mutation sum mentioned in it which sum was ad·
mittedly a capital receipt. The words "final commutation'' in
s. 7 (2) of the Latter Regulation did not show that the interim
allowances were part of the comrriutation sum and, therefore,
1963
April 4
1963
Raj• Ram~•tcara Rao
••
Conrmi :siontt of '!rt·
cornt-tax, /~.,tftrabad
Sarkar J.
848 SUPREME COURT REPORTS [1964] VOL.
of the nature of capitr.l receipts but they only meant that the
final commutation was the only commutation that thejagirdar
was to get in respect of his rights in thejagir .
The observation in Commissioner of Inland Revenue v,
Butterley
&
'Co. Ltd. that
such interim allowances were
sui generis and were neither income from property nor from
investment nor did it arise from the right to compensation but
arose from· the statute itself which directed it to be paid,
approved.
Shanmugha Raje.!Wara Sethupalhi v. Income-taz 0 fficer,
Karaikudi, [1962] 44 I. T. R. 853. Ccmmi.!•ionor of lnrome-taz
v. Shaw Wallace & Co. (1932) L. R. 59 I. A. 206 and Cammi8-
Bioner of Inland /levenut v. Butterley & Co. Ltd., (1956) 36
T. C. 411, rcfrrred to.
Crvn, APPEL!,ATE juRI8DICTIO!'<' : Civil Appeal
No. 420 of 1962.
Appeal from
the judgment and order dated
April 3, 1959 of the Andhra Pradesh High Court in
Writ Petition No. 17 of t 956 {Referred Case).
C. Krish1UJ Reddy, A. V. V. Nair and P. Ram
Rec'dy, for the appellant.
K. N. Raja;Jopal Snstri and R. N. Sachthey,
for the respondent.
l!J6:l.
April 4.
The Judgment of the Court
was delivered by
SARKAR .J.-The appellant was the proprietor
of the Wanaparthy Jagir in the former Indian State
of HyJerabad. Certain payments described as interim
maintenance allowances were mad'e to him under
the Hyderabad (Abolition of .Jagirs) Regulation
1 :158 F, hereafter called the Abolition Regulation.
These payments were brought to tax under the
I ncome·tax Act, I fE~ as income.
The appellant
contended that they were capital and not liable to be
taxed.
He took various proceedings and eventually
2 s.c.R.. . SUPREME COURT REPORTS
0849
a case was stated to the High Court of Andhra Pradesh
for decision of the following question :
"Whether the interii;n maintenance allowa-
nces received by the assessee under
the
Hyderabad (Abolition of Jagirs) Regulation,
1358 Fasli, are income and therefore liable
to tax."
The qu'estion was answered against the appellant .by
the High Court and hence this appeal.
The point at issue is whether these payments
constituted capital or income. The answer to this
question will have to be found Excerpt shown. Read the full judgment & AI analysis in Lexace.