BERI, C.J.—At the instance of the Commissioner Income-tax Rajasthan, Jaipur, this Court directed the Income-tax Appellate Tribunal Delhi Bench B to refer the following question under sec. 66(2) of the Income Tax Act, 1922 for answer by this Court namely,—

Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the sum of Rs. 62,204/- received by the assessee in 1951 was a capital receipt not liable to tax?"

2. Because the learned counsel for the parties in the course of their addresses often disagreed on the questions of facts we can do no better than relate the facts as agreed upon between the parties before the Tribunal and extract them from the statement of the case.

"The assessee is an individual, a Thikanedar of the State of Sikar, now in the State of Rajasthan. He had the paramount right to levy excise duty within the limits of his Thikana. After the formation of the States and their integration with the Union of India, it was decided by the Government of Rajasthan to take over the excise administration of all the States including the Thikana of the assessee. This decision was taken in order to have a uniform excise policy for all the States. The right to levy excise duty of the assessee was taken over by the State of Jaipur and the State Government decided to pay in lieu, what was called a compensation on a payment basis. The general basis of calculating such compensation for the first years was that out of the actual gross income from liquor consumed in the areas in question half the amount of duty and the cost of all preventive and other establishments including proportionate over-charged head-quarters charges (Sic.) were to be deducted and the balance was to be paid for distribution among the Thinkanedars concerned on the basis of population. In the case of the assessee, however, it was agreed that for the first year such compensation would be paid on the basis of the last years income subject to certain adjustments. It appears that subsequently in the year 1952, probably as a measure of general prohibition policy introduced in the Union of India, the Rajasthan Government decided to cancel the manufacture or distribution of liquor or other excisable articles and accordingly also decided to terminate the arrangement to pay compensation or cash grants to the Thikanedars of the Jagirs. It was, however, clarified by a letter dated the 10th of August, 1956, by His Highness the Rajpramukh of Rajasthan that the compensation payable in respect of the period prior to the issue of the aforesaid termination order will continue to be paid upto the date preceding the date of resumption of his Jagir. The assessee accordingly received a sum of Rs. 62,204.00 for the period from 18-7-1952 to 16-2-1954."

3. The assessment year concerned is 1958-59 for which the relevant previous year is the financial year ending on the 31st of March, 1958. A question arose before the Income-tax Officer whether the sum of Rs. 62,204.00 was a receipt liable to tax or not. The Income-tax Officer by his order dated 30th of October, 1958, found that it was a revenue receipt liable to tax. On appeal by the assessee the Appellate Assistant Commissioner by his order dated January, 30, 1951, confirmed the conclusion. The assessee took the matter up to the Tribunal which came to the concision on the basis of the authority of their Lordships of the Supreme Court in Senairam Doongarmal vs. Commissioner of Income-tax(l) that the sum of Rs. 62,204.00 was of the nature of the capital receipt not liable to tax. Request was made by the Department for making a reference to the High Court but the Tribunal declined to do so. Thereafter an application was made to this Court by the Commissioner of Income-tax Rajasthan and this Court directed the tribunal to refer the question aforesaid.

4. Mr. S. K. Mal Lodha, learned counsel for the Revenue submitted that the sum of 62,204.30 was the amount paid as compensation res

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