RAO NARAIN SINGH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference made by the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, at the instance of the assessee, Rao Narain Singh of Masuda, relating to the assessment year 1960-61. It arises out of Income-tax Appeal No. 786/JP of 1972-73 and Cross Objection No. 33/JP of 1972-73 for the assessment year 1960-61. Along with the statement of case, the following two questions of law have been referred to this court for its opinion arising out of the order of the Tribunal in the aforesaid appeal and cross-objection.

(2.) THE facts, as emanating from the statement of case : THE applicant-asses-see was the holder of the Istimrari estate of Masuda, situated in the District of Ajmer. According to the recital recorded in the books of the asses-see dated August 18, 1955, spelling out partition of compensation to be received on resumption of the Istimrari estate of Masuda Thikana and has been the property of family of the assessee for the last 14 generations. On March 29, 1875, Shri Bahadur Singh, the grandfather of the assessee, was the holder of the Thikana Masuda and was paying revenue in respect of the estate to the British Government. On that date, the Governor-General in Council issued a Sanad in favour of the late Shri Bahadur Singh whereby the then British Government waived its right of enhancing the assessment of the estate of Shri Bahadur Singh in future and declared the assessment of the said estate to be fixed in perpetuity. THE Sanad recited that the Istimrardar of Masuda for the time being and holders specified in Schedule "A" shall all time be faithful to Her Majesty the Queen Victoria and this Sanad was prefaced with the object that "whereas the Government and Council has been pleased to waive the right of the British Government to enhance the assessment of your estates and to declare the existing assessment of the said estates to be fixed in perpetuity, therefore, the Sanad was granted to set forth the conditions in consideration of the true and faithful observance and fulfilment of which by the Istimrardar, then holding the estate, to be observed truly and faithfully and his heirs representatives or assignees the concession was made." In other words, the Sanad contained the conditions on the fulfilment of which the concession of freedom from enhancement of revenue was granted in consideration of faithful allegiance to British Crown.

(3.) THE ancient impartible estate of Thikana of Masuda which was inherited by the present assessee, the eldest son, at the time of death of his father, consisted of (i) the Istimrari estate consisting of the villages mentioned in Schedule "A" to the Sanad of 1875, (ii) the immovable properties situated in Masuda, Ramgarh, Vijay Nagar and Ajmer, and (iii) the business in the name of Vakil and Co.