1975 (4) TMI 31 - HC - Income Tax

Summary

Issues involved: Interpretation of income-tax liability on the maintenance allowance received by a member of a former princely state's royal family.

Summary:
The judgment pertains to a case where a member of the royal family of a former princely state challenged the imposition of income-tax on the maintenance allowance received. The appellant, a half-brother of the former ruler, contended that the allowance was paid out of the family's income from an impartible estate and thus should be exempt from income-tax. The court examined the historical context of the princely state's governance and the nature of the allowance to determine the tax liability.

Historical Context and Allowance Details:
After India's independence, the former princely states formed a union with the Union of India, surrendering their sovereignty and receiving privy purses and allowances. The appellant, a member of the royal family, received a monthly allowance from the sum allocated for relations of the former ruler. The appellant's contention was that the allowance was part of the family's income from an impartible estate and thus should be exempt from income-tax.

Legal Interpretation of Income and Tax Liability:
The court analyzed the definition of "income" under the Income-tax Act, emphasizing that any periodical receipt, including the appellant's allowance, should be considered income for tax purposes. It highlighted that tax is a compulsory levy for public purposes, and exemptions must be expressly provided by law. The appellant sought exemption under specific sections of the Income-tax Act related to Hindu undivided families and impartible estates.

Exemption Claims and Precedents:
The court noted that the appellant's case did not fall within the exemptions provided for income from Hindu undivided families or impartible estates. It distinguished previous cases where exemptions were granted based on the continued existence of the impartible estate. The court also referenced a case where a similar maintenance allowance was held exempt from income-tax under specific regulations applicable to a former princely state.

Judgment:
Ultimately, the court held that the appellant was liable to pay income-tax on the maintenance allowance received, as it did not qualify for exemption under the Income-tax Act. The appeal was dismissed, and the appellant was ordered to comply with the tax liability. The judgment was delivered unanimously by the judges presiding over the case.