Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1960 Supreme(SC) 76

SUPREME COURT OF INDIA
5th March, 1960.
S.K. DAS, J.L. KAPUR AND M. HIDAYATULLAH, JJ.
Her Highness Maharani Kesarkunverba Saheb of Morvi, Appellant
Versus
Commissioner of Income-tax, Bombay, North, Kutch and Saurashtra, Ahmedabad, Respondent.
Civil Appeal No. 138 of 1959.
Advocates appeared
Mr. N. . Palkhivala, Senior Advocate, (M/s. S. N. Andley, J. B. Dadachanji and Rameshwar Nath, Advocates, of M/s. Rajinder and Co., with him), for Appellant; Mr. K. N. Rajagopal Sastri, Senior Advocate (Mr. D. Gupta, Advocate, with him), for Respondent.

Advocates:
D.GUTPA, J.B.DADACHAN, K.N.RAJAGOPAL SASTRI, N.A.PALKHIWALA, RAJINDAR NARAIN, RAMESHWAR NATH ROY, S.N.ANDLEY

A grant of a village to a Raj Mata for her maintenance is exempt from income tax under paragraph 15(1)(i) of the Part B States (Taxation Concessions) Order, 1950.

Headnote:
INCOME TAX - Maintenance allowance - Grant of village to Raj Mata - Whether exempt from income tax - Part B States (Taxation Concessions) Order, 1950, Paragraph 15(1)(i).
Fact of the Case:

The assessee, the Raj Mata of Morvi State, received an annual cash allowance of Rs. 5,000/- from the State since 1922. In 1948, the State granted her a village, Mota Dahisara, for her maintenance. The Government of Saurashtra, which succeeded the Morvi State, resumed the village and granted her a cash annuity of Rs. 35,807/- in lieu thereof. The Income-tax Officer held the entire sum of Rs. 60,000/- (including the Jiwai of Rs. 24,193/-) to be liable to income-tax. The Appellate Assistant Commissioner held that the amount of Rs. 35,807/- was liable to tax and not the sum of Rs. 24,193/-. The Income-tax Appellate Tribunal held that the entire sum was exempt from income-tax and super-tax, as it fell within Paragraph 15 (1)(i) of the Part B States (Taxation Concessions) Order, 1950.
Finding of the Court:

The High Court held that Rs. 35,807 /- and Rs. 24,193/- were two distinct heads of cash annuities, the former in lieu of village Mota Dahisara and the latter by way of Jiwai i.e. maintenance. It was of the opinion that the appellant was granted Jiwai (maintenance) of Rs. 5,000/- per month by her husband as from September 1947. It also held that the grant of the village was not by way of maintenance.
Issues: Whether the grant of the village to the Raj Mata was by way of maintenance and therefore exempt from income tax under paragraph 15(1)(i) of the Part B States (Taxation Concessions) Order, 1950.
Ratio Decidendi: The Supreme Court held that the grant of the village was by way of maintenance and therefore the sum of Rs. 35,807/- was also maintenance allowance. The Court observed that maintenance must vary according to the position and status of a person and that it does not only mean food and raiment. The Court also held that the High Court was in error in holding that Rs. 35,807/- was not by way of maintenance and therefore was not exempt from taxation under paragraph 15(1)(i) of the Order.
Final Decision: The Supreme Court allowed the appeal, set aside the order of the High Court and answered the question in favour of the appellant.

Judgment

KAPUR, J. : This is an appeal by special leave against a judgment and order of the High Court of Bombay. The assessee Her Highness Maharani Kesarkunverba Saheb, the Raj Mata of Morvi State, is the appellant and the Commissioner of Income-tax Bombay, North, is the respondent. The question that arises for decision is whether the annual cash allowance paid to the appellant in circumstances stated below falls within Paragraph 15 (1) (i) of the Part B States (Taxation Concessions) Order, 1950 (hereinafter referred to as the Order) and is therefore exempt from income-tax.

2. The appellant was receiving from the Morvi State since 1922 an allowance called Jiwai (maintenance allowance). By a Resolution dated September 26, 1947 passed by His Highness Lukhdhirji of Morvi, the husband of the appellant, it was resolved that a sum of Rs. 5,000/- per month be paid to the appellant and provision be made for the amount by the Treasury Office in the Budget in the same manner as before. On January 21, 1948 His Highness Lukhdhirji abdicated and his son His Highness Mahendra Singhji succeeded to the rulership. The covenant for the formation of Kathiawar States Union was signed on January 23, 1948. On February 26, 1948 a Resolution was passed by the son of the appellant granting a village, Mota Dehisara, to the appellant. The relevant portion of this Resolution was as follows :

"From ancient times there has been a tradition in our family to grant a village to the Maharani for her enjoyment in order to maintain her status and dignity. However, since a village remains to be granted accordingly to our revered mother, Akhand-Sau-Bhagyawanta Kesar Kunverba Sahib as the Maharani, it is resolved to grant her the village of Mota Dahisara, under (our) control and having the area and boundaries as per annexures hereto.

We resolve to grant the said village, for enjoyment to our Maharani, Shri Vijaykunver of Rangpur, after the lifetime of our mother Kesar Kunverba Sahib in accordance with the above tradition."

A formal grant was made on March 16, 1948 which was as follows :

"In order to preserve permanently your status and dignity the village of Mouje Mota Dahisara . . . . is hereby granted to you as a gift in pursuance of the immemorial tradition of this State . . . . . . The said village and the land etc., thereof have been granted to you in order to maintain your status and dignity as the Queen Mother as stated above. You may enjoy the same in peace exclusively. On your death the right of enjoyment of the entire rights, together with the restrictions mentioned in the present writing shall vest in our Akhand Saubhagvanta Maharani Shri Vijay Kunvar of Rangpur."

On March 20, 1948 the State of Morvi became a part of the Saurashtra Union. The Government of Saurashtra refused to continue the maintenance allowance or to recognise the grant of the village Mota Dahisara to the appellant. She then made certain representations and after some conferences and some discussion a copy of the order of the Political Department was sent to the appellant in which it was stated that the village would be resumed and an amount calculated on the basis of average revenue of the village for 3 years would be paid to her as cash allowance for lifetime. To this the appellant took objection and her son the Maharaja of Morvi also wrote a letter to the Rajpramukh of Saurashtra stating that the village had been illegally resumed and that her Jiwai had also been stopped. To this the Rajpramukh replied on May 19, 1949 saying that it had been decided that the village would be resumed and a cash allowance in lieu thereof would be paid to the appellant for life and he advised the Maharaja of Morvi not to press the claim as put forward in his letter and also that the appellant should accept the resumption of the village and agree to take a cash allowance instead. The appellant then wrote a latter to the Rajpramukh on May 26, 1949 in which she insisted that she should continue to have the vi

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