MAHARAJADHIRAJ HIMMAT SINGHJI Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) THIS reference has been made by the Tribunal, Jaipur Bench, and is a joint reference in the matter of wealth-tax as well as income-tax assessments of the assessee, Maharajadhiraj Himmat Singhji. The relevant year for the wealth-tax is 1957-58, and for the income-tax matters, 1961-62 to 1965-1966 The facts giving rise to this reference briefly stated are that the assessee, Maharajadhiraj Himmat Singhji is the second son of late Maharaja Shri Ummed Singh, the then Ruler of the erstwhile Jodhpur State. On the death of Maharaja Shri Ummed Singh, his eldest son, the late Maharaja Shri Hanuwant Singh succeeded to the Jodhpur State. Maharaja Hanuwant Singh had four brothers including the present assessee. He gave jagirs and residential accommodations to his four brothers as their " chhut bhai bunt" and the assessee received 17 villages and a residential house in Jodhpur. The assessee is governed by the Hindu Mitakshara law and by custom as well as the Marwar Land Revenue Act, the rule of primogeniture is applicable to him. The jagir and the residential house received by the assessee is on that account impartible. The assessee held the jagir land and the residential house till 30th June, 1954, whereafter the jagir was resumed by the Government of Rajasthan, which had succeeded to the State of jodhpur and some interim compensation was paid to the assessee. Up to 5th Sept., 1956, he had received Rs. 1,25,520 as interim compensation. The compensation was finally determined on 21st Aug., 1959, at a figure of Rs. 7,02,659 and on the above basis, the balance of compensation which was due to him on the valuation date was Rs. 5,77,139 though the jagir bonds in respect of the compensation were issued only after 21st Aug., 1959. Out, of the jagir bonds, the assessee had on the request of his wife got the bonds issued separately in his name and in the names of his wife and two minor sons. The market value of the above bonds amounting to Rs. 5,77,139 was determined by the WTO at Rs. 4,10,169 and included in the total wealth of the assessee. The residential house was sold by the assessee to the Government of Rajasthan on 1st March, 1958, for Rs. 3,00,000. Out of the sale proceeds, the assessee deposited different amounts in fixed deposits in the names of his wife and his two minor sons. The WTO took the value on the date of the valuation at the same figure. These assets were treated by the WTO as the individual assets of the assessee and the valuation thereof was included in his total wealth. In the income-tax assessments, the income arising to the assessee from the investments in the names of his minor sons of a part of the realisations from the sale of the property was also treated as the individual income of the assessee. The assessee filed appeals against these assessments as he claimed that these assessments and the income from the investments out of the sale proceeds were the assets and income of the joint Hindu family of which the assessee was the "Karta" and the appeals were accepted by the learned AAC. He found that the compensation received on the resumption of the jagir as also the residential house could not be treated as the individual assets of the assessee and that they were the assets of the joint Hindu family headed by the assessee. The WTO filed an appeal against the order of the learned AAC, which was accepted by the Tribunal and the Tribunal held that these assets constituted the individual property of the assessee. Similarly in the appeals against assessments of income-tax, the AAC held the incomes to be of the joint family and not to be the individual income of the assessee but on appeal by the ITO, the Tribunal reversed the order and held that such income was rightly included in the total income of the assessee under s. 64(iv) of the IT, Act. Thereupon, the Tribunal was requested to make a reference to this Court and the learned Tribunal referred the following questions to this Court :

(2.) WHETHER, on the facts and in the circumstances of the case, the Tribunal are justified in holding that the market value of the compensation receivable by the assessee in respect of the jagir lands resumed by the Government of Rajasthan was includible in his total wealth for the asst. yr. 1957- 58, though the exact amount of compensation payable to him was finally determined only in August, 1959 ?