MAHARAJADHIRAJ SIR KAMESHWAR SINGH Vs. STATE OF BIHAR

JUDGEMENT

(1.) This appeal, with the special leave of this Court, has been filed by Maharajadhiraja Sir Kameshwar Singh of Darbhanga (hereinafter referred to as the assessee) against the judgment of the High Court of Patna dated 19-2-1952, by which the High Court answered in the affirmative the following two questions referred to it under S. 25 (1) of the Bihar Agricultural Income-tax Act, 1938:

(2.) The facts of the case lie within a very narrow compass. For the assessment year 1944-45 which corresponded to the year of account 1351 Fasli, the assessee returned Rs. 37,43,520 as his agricultural income. He claimed a deduction of Rs. 9,42,137-3-10 1/2 on account of land revenue, rent etc., including a sum of Rs. 2,82,192 shown to have been paid to the Tekari Raj from which two leasehold properties were taken on 'zarpeshgi' lease by indentures dated 15-8-1931, and 31-1-1936, respectively. The amount was sought to be deducted as a capital receipt.

(3.) The Agricultural Income-tax Officer of Darbhanga by his order dated 28-12-1945 accepted this contention, and exempted the amount from payment of agricultural income-tax. He observed: "'Out of Rs. 9,42,137-3-10 1/2 claimed on account of Land Revenue and rent, Rs. 2,82,192 is shown as payment to Tekari Raj and then taken towards the realisation of Zarpeshgi Loan to self. I have gone through the bond of Gaya Zarpeshgi Lease. This payment is allowed to the assessee, as it is a capital income according to the terms of the bond. At the same time, I think, this amount of Rs. 2,82,192 should be treated as income to Tekari Raj and assessed in Gaya Circle along with other income of Tekari Raj as it is credited to that Raj by the assessee and then set off against the Zarpeshgi loan advanced to Tekari Raj." The assessment was approved by the Assistant Commissioner of Agricultural Income-tax on 4-1-1946, and on the day following, the Income-tax Officer passed his formal order and issued a demand notice.