ANAND BEHARI LAL Vs. COMMR OF INCOME-TAX

JUDGEMENT

(1.) Two questions have been referred to us under Section 66 (1), Income-tax Act for answer:

(2.) The facts that appear from the statement of the case are as follows.

(3.) One Mohammad Azim Khan was a claimant to the Nanpara and the Atraula taluqas. His suit had been dismissed in the original side of the Oudh Chief Court and, instead of filing an appeal under Section 12 (2) of the Oudh Courts Act, he applied for leave to appeal to the Privy Council. The application having failed he filed an application for special leave which was granted, subject to any objection that might be taken at the time of the hearing that no appeal had been filed before a Division Bench under Section 12 (2) of the Oudh Courts Act. The Privy Council ultimately cancelled the leave granted. Mohammad Azim Khan thereupon applied for leave to appeal under Section 12 (2) of the Oudh Courts Act and filed applications under Sections 5 and 14, Limitation Act for condonation of the delay. He needed money for this porpose and on 19-9-1940, he sold to Anand Behari Lal and three others a half share in the talucas, which were the subject-matter of dispute, for a sum of Rs. 50,000, out of which Rs. 1000 was utilised in purchasing the necessary stamp for the sale deed and for registration expenses and the balance was loft with Anand Behari Lal for the prosecution of the case. Under the sale deed the vendees became owners of a half share in the property for a sum of Rs. 50,000 which, however, instead of being handedover to the vendor was kept with the vendee for the purpose of meeting the expenses of the litigation. On the same day an agreement was entered into which limited the liability of Anand Behari Lal. In this agreement it was provided that if the Chief Court dismissed the application for leave on the ground of limitation then Anand Behari Lal will not be liable to pay anything more or meet any further expenses of litigation and he would in that case become the owner of a two annas share in the property instead of eight annas.