1968 (9) TMI 22
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....ome liable to assessment under the Income-tax Act ? " 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 February 23, 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 lifetime 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: " 7. The ruler has the right in his discretion to issue orders to exchange the whole or part of the area of your jagir with other area of equ....
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....cable in the matters of the reduceable jagirs also." The assessee applied under this clause for conversion of his jagir into mansab. By a notification of the Chief Commissioner, Bhopal, dated August 11, 1953, issued in exercise of the powers under clause 30(i)(c) the assessee's jagir was converted into ' mansab ' (cash annuity) and he was grant. ed a sum of Rs. 1,07,591-15 as. per year as mansab payable for his life. By the same notification the jagir was taken over by the State. The notification of the Chief Commissioner which also covered other jagirs is as under: Notification No. 1, dated the 11th August, 1953 . " In exercise of the powers vested under clause 30 sub-clause (c) of the orders relating to jagirs in Bhopal State, the Chie....
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....sessment years 1955-56 and 1956-57. But in the assessment proceedings for the year 1957-58 relating to the previous year ending 31st March, 1957, the assessee contended that the receipt of Rs. 1,07,591 was not a receipt of a revenue nature but was in the nature of a capital receipt and was not liable to income-tax. This contention of the assessee was negatived by the Income-tax Officer whose order was upheld in appeal by the Appellate Assistant Commissioner and the Tribunal. On application of the assessee, the Tribunal has referred for our answer the question of law which we have already quoted. From the facts that we have stated above it will be clear that the assessee himself made in application under clause 30(i)(c) of the order relatin....
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....s capital back in the form of yearly payments, then the payments are not income payments and are not taxable." Having regard to the facts of the instant case and the principles stated above, in our opinion the assessee in this case exchanged his jagir which was a capital asset for a life annuity which was a revenue receipt in his hands. This was not a case where the jagir was exchanged for a capital sum payable in instalments: See Maharaj Kumar Gopal Saran Narain Singh v. Commissioner of Income-tax. 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 Rameshwar Rao v. Commissioner of Income-tax and Shanmugha Rajeswar....