TMI Blog1971 (9) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... , speaking through S. K. Kapur J., answered that question in the negative. Being dissatisfied with that decision the assessee has brought these appeals. Now, turning to the facts of the case, the concerned assessment years are 1952-53, 1955-56 and 1956-57, the relevant accounting periods being financial years ending March 31, 1952, March 31, 1955, and March 31, 1956. The assessee is a registered firm deriving income from interest on securities, property, business and other sources. Some time in the year 1946 it purchased the Nedous Hotel in Lahore for a sum of Rs. 46 lakhs. For that purpose it raised a loan of Rs. 30 lakhs from M/s. Bharat Bank Ltd., Lahore, and a loan of Rs. 18 lakhs from the Raja of Jubbal. The loan taken from the bank was partly repaid but as regards the loan taken from the Raja, the assessee came to an agreement with the Raja under which the Raja accepted a half share in the said property in lieu of the loan advanced and also 1/3rd of the outstanding liability of the bank. This arrangement came into effect on November 1, 1951. After the creation of Pakistan, Lahore became a part of Pakistan. The Nedous Hotel was declared an evacuee property and, consequently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome. According to the revenue, the word "owner" in section 9 refers to the legal ownership and not to any beneficial interest in the property. For deciding the question whether the assessee was the owner of the property for the purpose of section 9 of the Act during the relevant accounting years, we have to look to the provisions of the Ordinance. Let us first take a survey of the relevant provisions of the Ordinance and thereafter analyse the effect of those provisions. The long title of the Ordinance says that it is an Ordinance to provide for the administration of the evacuee property in Pakistan and for certain matters incidental thereto. The Preamble says that : " Whereas an emergency has arisen which renders it necessary to provide for the administration of evacuee property in Pakistan and for certain matters incidental thereto " Section 6(1) provides that all evacuee property shall vest and shall be deemed always to have vested in the Custodian with effect from the 1st day of March, 1947. Section 9 gives power to the Custodian to take possession of the evacuee property. Section 11 provides that any amount due to an evacuee or payable in respect of any evacuee pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he expenses incurred by him in the administration of the evacuee property from out of the receipts in his hand in respect of that property. Section 22(1) requires the Custodian to maintain separate account of the property of each evacuee of which he has taken possession and shall cause to be made therein entries of all receipts and expenditure in respect thereof. The Ordinance starts by saying that it is an Ordinance to provide for the administration of evacuee property and not management of evacuee property. The expression "administration", in relation to an estate, in law means management and settling of that estate. It is a power to deal with the estate. The evacuee could not take possession of his property. He could not lease that property. He could not sell that property without the consent of the Custodian. He could not mortgage that property. He could not realise the income of the property. On the other hand, the Custodian could take possession of that property. He could realise its income. He could alienate the property and he could under certain circumstances demolish the property. All the rights that the evacuee had in the property he left in Pakistan were exercisable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erpreted reasonably and in consonance with justice. The question as to who is the owner of a house property under section 9 of the Act in circumstances similar to those before us came up for consideration before the Calcutta High Court in the matter of Official Assignee for Bengal (Estate of Jnanendra Nath Pramanik). In that case, on the adjudication of a person as insolvent under the Presidency Towns Insolvency Act, 1909, certain house property of the insolvent vested in the official assignee. The question arose whether the official assignee could be taxed in respect of the income of the property under section 9. The High Court held that the property did not by reason of the adjudication of the debtor cease to be a subject fit for taxation and, in view of the provisions of section 17 of the Presidency Towns. Insolvency Act, the official assignee was the "owner" of the property and he could rightly be assessed in respect of the income from that property under section 9. Section 17 of the Presidency Towns Insolvency Act reads : " On the making of an order of adjudication, the property of the insolvent wherever situate shall vest in the official assignee and shall become divisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wned" by the incorporated trustees'. " The learned judges of the Calcutta High Court in reaching that conclusion relied on the decision in Commissioners of Inland Revenue v. Fleming. That appeal related to a claim for repayment of income-tax to which the respondent claimed to be entitled in respect of "personal allowance" introduced into the income-tax system by section 18 of the Finance Act, 1920. The claim arose in the following circumstances : The respondent was declared insolvent in 1921. He was then the owner of charitable properties. His insolvency lasted till May 10, 1926, when he received his discharge on payment of composition and was reinvested in his estate. At that time his estate consisted of, (1) two of the original charitable properties which had not been realised by the trustees in the insolvency and, (2) a balance in cash of pound 53 odd. During the insolvency, the trustee paid income-tax on the full annual value of the two properties in question. The contention of the respondent was that the radical right to these properties was in him all the time, and that, in paying the tax, the trustee was really paying it on his behalf--that is, on his income--and that, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of English courts dealing with the question of levy of income-tax on the income from enemy properties taken possession of by the Custodian during the war. In those cases the English judges have enunciated the theory of suspended ownership. We do not think that we need call assistance from those decisions. Mr. Mahajan contended that despite the fact that evacuee property was taken over by the Custodian and that he had been conferred with large powers to deal with it, an evacuee from Pakistan who owned that property before he migrated to India still continued to be the owner of the property. For this contention of his he placed reliance on some of the observations of this court in Amar Singh v. Custodian, Evacuee Property, Punjab. Therein, delivering the judgment of the court, Jagannadhadas J. observed (at page 815 of the report) : " Stopping here it will be seen that the position, in its general aspect, is that all evacuee property is vested in the Custodian. But he evacuee has not lost his ownership in it. The law recognised his ultimate ownership subject to certain limitations. The evacuee may come back and obtain return of his property, as also an account of the manageme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the question was whether the receiver of a property appointed by court was the owner of the property for the purpose of section 9 of the Act. The court came to the conclusion that he was not the owner as the property did not vest in him. In fact, in the course of the judgment, the court made a distinction between a receiver and a trustee and an official assignee. In our opinion this decision instead of supporting the case of the appellant may lend some support to the contention of the revenue. Reliance was next placed on the decision of the Calcutta High Court in Nawab Bahadur of Murshidabad v. Commissioner of Income-tax. The facts of that case were : Properties which belonged to the ancestors of the Nawab of Murshidabad as rulers were, some time after the territories had been conquered by the British, settled by the Secretary of State for India in the year 1891 on the then Nawab of Murshidabad under a deed of settlement which provided that such properties "shall henceforth and for ever be held and enjoyed by the said Nawab Bahadur and such one among his lineal male heirs as may be successively entitled to hold the said title in perpetuity, with and subject to the incidents ..... X X X X Extracts X X X X X X X X Extracts X X X X
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