Sabyasachi Mukharji, J. - (1.) In this reference under Section 256(1) of the Income-tax Act, 1961, the following question has been referred to this court : "Whether, on the facts and in the circumstances of the case, and on a correct interpretation of the provision of West Bengal Act No. II of 1963, as amended by the West Bengal Act No. XXXIX of 1963, the Tribunal was right in holding that the sum of Rs. 84,000 was not deductible in computing the total income of the assessee ?"
(2.) The assessment years involved are 1964-65 to 1967-68. This question is an echo from the old history of Bengal. Nawab of Murshidabad was the Nawab Nazim and Subedar of Bengal, Bihar and Orissa and was entitled to the title of Nawab Nazim and the authority, dignity, stipend, pay, allowances, privileges and rights thereof and up to 1891, the said Nawab of Murshidabad was receiving these allowances and stipends for the maintenance of his dignity. Disputes had arisen between the Nawab, the members of his family and the Government of India represented by the Secretary of State for Council. On 12th March, 1891, there was an indenture of agreement entered into between the Nawab of Murshidabad and the Government of India. The said indenture recited, inter alia, that there were certain disputes between the Government of India and the Nawab and in settlement of the disputes a sum of Rs. 16,85,461-7-51 had been paid and another sum of Rs. 10 lakhs was paid in satisfaction and in discharge of certain claims. The identure further recited that it had been agreed between the Secretary of State and the said Nawab Bahadur that provision should be made for the maintenance or support of Nawab Bahadur of Murshidabad and Amir-ul-Omrah for the time being and for the maintenance of the honour and dignity of his station ; and same should comprise and consist of the following ; "1st--An annual payment of Rs. 2,30,000 from the revenues of the Government of British India to be made to the Nawab Bahadoor of Moorshedabad for the time being in the manner mentioned in the deed. 2nd.--The income of the immovable properties mentioned and specified in the said 1st and 2nd Schedules to these presents. 3rd.--The income of the immovable properties mentioned in the 3rd Schedule to these presents as purchased with the sale proceeds of the jewels mentioned and specified in Schedules V and VI to the said report and certificate to the said Commissioner and all properties that may in future be purchased with the sale proceeds of the said jewels. 4th.--The income of properties purchased with the sale proceeds of such of the immovable properties mentioned and specified in the 1st, 2nd and 3rd Schedules to these presents as may at any time with the sanction of His Excellency the Governor-General in Council be disposed of." The other parts though historically interesting are not fiscally relevant. The said indenture was confirmed by statutory recognition by Bengal Act XV of 1891. The same was later on amended from time to time. It is not necessary for us to refer to the said amendments. The said indenture as mentioned hereinbefore contained certain Schedules. Schedules I and II consisted of certain immovables and Schedule III also consisted of certain immovables which had been purchased with the sale proceeds of the jewellery mentioned in the said indenture. The Schedule of the properties did not, however, contain the annual payment of Rs. 2,30,000. The said sum was to be paid by the Government to the Nawab Bahadur of Murshidabad for the time being from the "revenue of British India". It is important to emphasise that the annual payment of Rs. 2,30,000 from the revenue of the Government of British India was mentioned in the said indenture to be in consideration of relinquishment of certain rights and privileges by the Nawab Bahadur of Murshidabad in favour of the British Government. As mentioned hereinbefore, the said indenture was confirmed by the Murshidabad Act of 1891. The said Act was, as we have indicated before, amended from time to time. Thereafter in 1963, the West Bengal Act II of 1963, being the Murshidabad Estate (Trust) Act, 1963, was passed. The said Act recited as follows: "An Act to provide for the creation of a trust in respect of the properties enjoyed by the late Nawab Bahadur of Murshidabad for the benefit of his sons and daughters. Whereas it is no longer necessary in the altered circumstances to make provision for the maintenance of the honour and dignity of the Nawab Bahadur of Murshidabad ; And, whereas the late Nawab Bahadur of Murshidabad expressed a desire that on his death a trust should be created in respect of all the properties enjoyed by him for the benefit of his sons and daughters ; And whereas it is necessary to give effect to the said desire of the late Nawab Bahadur of Murshidabad and to that end to create a trust in respect of the properties of the Murshidabad Estate ;........."
(3.) The said Act provided certain definitions in Section 2. The said Act in Sub-section (10) of Section 2 provides the definition of "properties of the Murshidabad Estate"' and the same included the properties movable and immovable specified in the Schedule. It is important to reiterate that the properties of the Murshidabad Estate include the properties movable and immovable specified in the Schedule to the Act. The Schedule to the Act provided that the properties of the Murshidabad Estate would be as follows : "I. Such of the properties, movable and immovable, referred to in the indenture included in, and confirmed by, the Moorshedabad Act, 1891, including the Schedules of properties annexed thereto, with the additional immovable properties added under the provisions of: (a) Sub-section (1) of Section 3 of the Act, and (b) Section 32 of the Land Acquisition Act, 1894, as formed part of the Murshidabad Estate immediately before the commencement of this Act and are situated in West Bengal or in any place outside West Bengal. II. All moneys awarded or payable under the Land Acquisition Act, 1894 or the West Bengal Estates Acquisition Act, 1953, as compensation for the acquisitionVtf any of the immovable properties referred to in item I mentioned above. III. All moneys received in West Bengal as income from, or compensation for requisition or acquisition of, such of the properties referred to in item I mentioned above as are situated in any place outside West Bengal." It may be noted that the right of Nawab Bahadur to receive the sum of Rs. 2,30,000 does not find a place amongst the items included in the Schedules to the Act or within the definition of the properties of Murshidabad Estate. Section 3 of the said Act provided as follows : "3. As from the appointed day- (1) all the properties of the Murshidabad Estate (hereinafter referred to as the trust properties) shall vest in the Trustee to be held by him in trust for the benefit of the sons and daughters of the late Nawab Bahadur. (2) The Trustee shall receive a monthly sum of rupees nineteen thousand one hundred and sixty-six and ten annas and eight pies, referred to in the Indenture included in, and confirmed by, the Moorshedabad Act, 1891, payable from the Government Treasury at Berhampore in the district of Murshidabad and shall give receipts therefor. (3) The Trustee shall receive and recover all rents, issues and profits due in respect of the properties of the estate, and shall upon receiving such rents, issues and profits give receipts therefor.";