BEGUM SURIYA RASHID Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference at the instance of the assessee made by the Income -Tax Appellate Tribunal under section 66 (1) of the Income Tax Act, 1922. The question of law referred to us is:

(2.) THE material facts are these. The assessee Nawabzada Rashiduzzafar Khan, who is now dead and is represented before us by his legal representative, belonged to the royal family of Bhopal. By a sanad dated 23rd February, 1949 the assessee was granted by the ruler of Bhopal a Jagir of seventy -two villages having an annual income of Rs. 1,17,745 -10 As. The Jagir was for the life time of the assessee who was to observe all the laws and rules pertaining to Jagirs and was subject to eight conditions entered in the Sanad. Condition No. 7 was as follows: -

(3.) THE learned Advocate General who appeared for the assessee in support of his argument that what the assessee received was a capital receipt relied upon two cases viz: Raja Rameshwarrao Vs. Commissioner of Income tax, Hyderabad 49 ITR 144 SC and Shamagha Rajeshwara Sethunathi Vs. Income tax Officer Karaikudi 44 ITR 853. These cases lay down that payment of compensation for acquisition of a jagir under Jagir Abolition Acts is capital in nature. The instant case is different. Here the jagir was not acquired in lieu of compensation but it was converted into a life annuity on the application of the assessee. In our opinion, the cases cited are not applicable to the facts of the present case. It may however, be noted that in Raja Rameshwarao's case interim maintenance allowance payable to Jagirdars which was paid before the compensation for the loss of the jagir became due was held to be income assessable to tax.