Maintenance allowance paid out of the consolidated fund of the Union of India is not exempt from income tax under Section 14(1) of the Indian Income-tax Act, 1922, and Section 10(2) of the Income-tax Act, 1961.

M.R.Sharma, J.

1. After India attained independence on August 15, 1947, the erstwhile Princely States of Patiala, Kapurthala, Jind, Malerkotla, Nabha, Faridkot, Kalsia and Nalagarh entered into a covenant with the Union of India and formed a State commonly known as the Patiala and East Punjab States Union. The then His Highness the Maharaja of Patiala, by common agreement, was appointed as the Raj Pramukh of the State. The ruling Princes of the covenanting States surrendered their sovereignty, the State properties and the territories forming their respective States. The Government of India, in turn, agreed to pay privy purses to the ruling Princes and allowances to their dependants or their relations. The Ruler of the erstwhile State of Patiala, pursuant to this agreement, was informed by letter dated April 2, 1949, by the Ministry of States, Government of India, regarding its decision with regard to the privy purse allowance admissible to him as Raj Pramukh and allowances for Rajmatas and other relations.

2. The privy purse of the then His Highness the Maharaja of Patiala was fixed at Rs. 17 lakhs per annum and his allowance as Raj Pramukh was fixed at Rs. 5 lakhs per annum. The latter allowance was exclusive of the cost of the staff required for the private secretarys office which was to be paid for separately by the PEPSU Government. Both these allowances were personal to the then Raj Pramukh and in case of his demise they were to be refixed for his successor.

3. For the other relations of the Raj Pramukh, a sum of Rs. 5 lakhs was sanctioned. The dowager Maharani was allowed a sum of Rs. 50,000 a year and the remaining sum of Rs. 41/2 lakhs was to be distributed between all other relations of late His Highness the Raj Pramukh. Originally, this sum of Rs. 5 lakhs was being drawn by late His Highness the Raj Pramukh and then distributed between his relations till 1953. Thereafter, the Maharaja of his own accord declined to undertake this job and the members of the family started drawing their respective allowances directly from the Patiala Treasury without any deduction of income-tax at source.

4. The appellant, Raja Raghavendra Singh, is half brother of late His Highness the Raj Pramukh. He was sanctioned an amount of Rs. 2,000 per month as allowance out of the sum of Rs. 5 lakhs set apart for the relations of the then His Highness the Raj Pramukh,

5. Pursuant to the circular issued by the Finance Department on May 17, 1955, the Treasury Officer, Patiala, started making advance deductions of income-tax from the allowance admissible in the case of the appellant.

6. Aggrieved by these deductions, the appellant filed a representation before the Commissioner of Income-tax, Patiala, who held that there was no specific provision exempting this allowance from payment of income-tax and hence rejected this representation on August 25, 1965.

7. The appellant then filed Civil Writ No. 657 of 1967 in this court challenging the imposition of income-tax on the ground that he was being paid this allowance as a member of the Hindu undivided family out of the income of the family, as also on the ground that the erstwhile State of Patiala was an impartible estate and that this fund was being paid out of the income of the holder of the estate belonging to the family. This petition was dismissed by a learned judge of this court and hence this appeal under Clause 10 of the Letters Patent.

8. It was urged on behalf of the appellant that the State of Patiala was an impartible estate of the property of the joint Hindu family of which the appellant was a member. This property was regulated by the rule of primogeniture in matters of succession. According to this rule, the eldest son succeeds to the gaddi as a Ruler and the younger ones, called the Maharaj Kumars, were entitled to suitable maintenance allowances out of the income of the impartible estate. This right had been recognised from the time when the erstwhile State of Patiala was carv