COMMISSIONER OF INCOME TAX ANDHRA PRADESH HYDERABAD Vs. H E H OSMAN ALI KHAN BAHADUR DIED H E H BARKAT ALI KHAN BAHADUR NIZAM OF HYDERABAD
HIGH COURT OF ANDHRA PRADESH
COMMISSIONER OF INCOME-TAX, ANDHRA PRADESH, HYDERABAD
H.E.H. OSMAN ALI KHAN BAHADUR (DIED), H.E.H. BARKAT ALI KHAN BAHADUR NIZAM OF HYDERABAD
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Sambasiva Rao, J. -
(1.)H. E. H. Mir Osman Ali Khan Bahadur, who was the erstwhile Ruler of Hyderabad State prior to its integration with the Union of India was the assessee in this case. he filed returns of income for the assessment years of 1952-53, 1953-54 and 1954-55 claiming various exemptions and deductions. The Income-tax Appellate Tribunal allowed some and refused some to her exemptions and deductions. Therefore, at the instance of the Revenue the following question has been referred to us. "Whether on the facts and in the circumstances of the case the interest from the Nizams Government Promissory notes received by the easiness is exempt form Tax"? At the instance of the assessee the following three questions have been referred; "
(1) Whether, in the circumstances of the case and having regard to International Law and construction of the Municipal Law and/or the convenient dated 25-1-1950 between the assesse and the Government of India, the assesse was liable to tax under the Income-tax Act, 1922, in respect of any part of his income?
(2) Whether on the facts of the case the interest in respect of securities of the Government of India or of the Government of Hyderabad (including the Nizam Government promissory notes), which became payable to the assessee under the Trusts created by him knows as the housing Accommodation Trust, Pilgrimage Money Trust, Family Trust, jewellery for Family Trusts and Miscellaneous Trust was exempt form payment of tax in his hand by virtue of Item 8 of the Notification under S. 60 of the Indian Income- tax Act, 1922 dated 21-3-1922?
(3) Whether, on the facts of the case. the sum of Rs. 1, 00,000.00 received by the assessee form the trustees of Princes Nilofer Trust was labial as income under the Income-tax Act and if so, whether the assessee was entitled to exemption form tax of the income under the e terms of the agreement entered into with the Government of India on 8-10-1949/
(2.)It may be mentioned here that several of the exemptions and deductions which the assessee claimed in respect of the three years under question were also claimed by the assessee in earlier years. On the previous occasion the matter came up to this corrupt in R. C. No. 35 of 1959 and ultimately went up to the Supreme Court and was decided there. The said decision of the Supreme Court is reported as Commissioner of Income-tax, Andhra Pradesh v. H. E. H. Mir Osman Ali Khan Bahadur, 59 ITR 666= (Air 1966 SC 1260 ) By the time the Income-tax Appellate Tribunal had adjudicated upon the assessment under consideration, the case before the supreme Court in respect of the earlier assessment was not heard and its judgment was not pronounced.
(3.)The question referred to us at the instance of the Revenue can easily be disposed of. Under this head, the amounts of interest in dispute are Rs. 10,875.00 for 1952-53, Rs. 19,504.00 fro 1953-54 and Rs. 3699.00 for the year 1954-55. These amounts of interest were realised by the assesse as interest on the N. G. P. Notes held by him. the claim of the assessee is that by virtue of the notification dated 21-3-1922 (item NO. 8) issued under Section 60 of the Indian Income-tax Act, 1922 (hereinafter called the Act) the interest received by him was totally exempt from tax. An identical question arose in the prior assessment years and a reference in respect thereof was made to its Corrupt in C. R. No. 35 of 1959 (reported in ILR (1963) Andh Pra 17). this Court answered the question infavour of the assessee. Following that decision, the Tribunal held that the three amounts should be deleted form the assessment of the assessee. However, at the time of the reference both parity agreed before the Tribunal that the answer to the question should follow and be identical with the decision of the Supreme Court which would be given in the appeal then pending before it against the decision of this Court in C. R. No. 35 of 1959. The Supreme Court gave a finis to this question by holding that interest on these securities which were held by the assessee as his private property, were entitled to the exemption under Item 8 of notification No. 878 F dated 21 st Marhc, 1922 . It therefore, follows that these three amounts relaised by the assessee by way of interest on these securities are exempt from tax, The first of the four questions viz., the question referred at the instance, of the Revenue is, therefore, answered inn the affirmative and in favour of the assessee.
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