HER HIGHNESS MAHARANI KESARKUNVERBA SAHEB OF MORVI Vs. COMMISSIONER OF INCOME TAX BOMBAY NORTH KUTCH AND SAURASHTRA AHMEDABAD
LAWS(SC)-1960-3-7
SUPREME COURT OF INDIA (FROM: BOMBAY)
Decided on March 15,1960

HER HIGHNESS MAHARANI KESARKUNVERBA SAHEB OF MORVI Appellant
VERSUS
COMMISSIONER OF INCOME-TAX, BOMBAY NORTH, KUTCH AND SAURASHTRA, AHMEDABAD Respondents


Cited Judgements :-

P N LEKHI VS. ADMINISTRATOR UNION TERRITORY OF DELHI [LAWS(DLH)-1976-8-16] [REFERRED]
RADHIKA NARANG VS. KARUN RAJ NARANG [LAWS(DLH)-2009-1-50] [REFERRED TO]
PRADEEP KUMAR SHARMA VS. RATNA SHARMA [LAWS(DLH)-2009-7-259] [REFERRED TO]
COMMISSIONER OF INCOME TAX VS. SHANTI MEATTLE SMT [LAWS(ALL)-1971-12-13] [REFERRED TO]
GEETA VS. BHUPINDER SINGH CHOUDHARY [LAWS(P&H)-2013-9-211] [REFERRED TO]
SOUMMOPRIYO CHAKRABARTI VS. TWINKLE CHAKRABARTY [LAWS(CAL)-2016-2-65] [REFERRED TO]
MOBD ARIF VS. BIBI JAMILA KHATOON [LAWS(PAT)-1988-8-25] [REFERRED TO]
MANEESH MITTAL VS. BRIJ BALA [LAWS(P&H)-2012-10-27] [REFERRED TO]
YASH PAL VS. KAUSHAL RANI` [LAWS(P&H)-2011-9-74] [REFERRED TO]
SHWETA TALWAR VS. RITESH KUMAR TALWAR [LAWS(P&H)-2017-9-129] [REFERRED TO]
SUHAN BASU VS. INDRITA BASU [LAWS(CAL)-2020-1-28] [REFERRED TO]
RAJARSHI GHOSH VS. SOMA GHOSH [LAWS(CAL)-2019-12-145] [REFERRED TO]
JAYEETA DAS GHOSH VS. AMIT DAS [LAWS(CAL)-2020-3-89] [REFERRED TO]
SRI SUBRATA ROY VS. SUSHRITA ROY [LAWS(CAL)-2020-1-127] [REFERRED TO]


JUDGEMENT

Kapur, J. - (1.)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 village. On November 19, 1949 the appellant's husband wrote to the Regional Commissioner, Mr. Buch, stating that he and her son, the Ruler, had with difficulty persuaded the appellant to accept Rs. 5,000/- a month and not to insist on anything more. The following extract from the letter is rather important and is therefore quoted:
"Most ladies are sentimental and she is no exception, and says her 'Abru' would go if she loses her village, so we suggested that if she gets the income of the village, whatever it may be and any amount over and above that will be given to her as Jiwai, making a total of Rs. 60,000/- a year; with this she can say she got both the things and her prestige will not suffer".
On March 30, 1950 the Government of Saurashtra passed a Resolution that in pursuance of the decision taken at the Jamnagar Conference the grant of the village Mota Dahisara would be resumed and in lieu thereof a cash annuity of Rs. 35807/- would be paid. The appellant was also granted Jiwai as Raj Mata of Rs. 24,193 /- per annum and thus a sum of Rs. 60,000/- per annum i.e. Rs. 5,000/- per mensem, was continued to be paid to the appellant. On June 19, 1950 the grant of the village was cancelled. The Income-tax Officer held the whole of Rs. 60,000/- to be liable to income-tax because in his view the appellant received that sum in exchange for two assets - right to the old maintenance allowance and the right to enjoy income from the village during her lifetime.
(3.)On appeal to the Appellate Assistant Commissioner the amount of Rs. 35,807/- was held to be liable to tax and not the sum of Rs. 24,193/-. An appeal was then taken to the Income-tax Appellate Tribunal which held that the entire sum was exempt from income-tax and super-tax, as it fell within Paragraph 15 (1)(i) of the Order. The Tribunal said:
"In the circumstances of the case stated above, it appears to us that the entire sum of Rs. 60,000/- is exempt from income-tax and super-tax. If you look at the substance of the transaction, it means that the assessee was granted a maintenance allowance of Rs. 60,000/-. The assessee wanted somehow or other to be associated with the village Mota Dahisara. To her it was a question of prestige. Again the cash annuity of Rs. 35,807/- was given to the assessee in lieu of the village Mota Dahisara. The village was granted to her for the purpose of maintaining the assessee's status and reputation as the Raj Mata. In other words, the village was given to her for her maintenance".
At the instance of the respondent the following question was referred under S. 66(1) of the Income-tax Act to the High Court:
"Whether there was material for the Tribunal to hold that the sum of Rs. 35,807/- granted to the assessee was a maintenance allowance exempt within the meaning of Paragraph 15(1)(i) of the Part B States (Taxation Concessions) Order, 1950 -
Which was reframed by the High Court as follows:
"Whether on the facts and circumstances of the case the sum of Rs. 35,807/- granted to the assessee was a maintenance allowance exempt within the meaning of Paragraph 15(1)(i) of the Part B States (Taxation Concessions) Order, 1950 -
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. After taking into consideration the several documents, that is, the grant, the letter of the appellant's son dated March 23, 1949 to the Rajpramukh of Saurashtra, the letter dated November 19, 1949, of the appellant's husband to Mr. Buch and the Resolution of the Government dated March 30, 1950, the High Court held that under the Resolution of the Saurashtra Government the appellant was given a cash annuity of Rs. 35,807/- in lieu of the village and not by way of maintenance. Against this judgment, the appellant has come to this Court in appeal by special leave.
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