Rajesh Balia, J. - (1.) THIS is a reference made by the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, at the instance of the assessee, Rao Narain Singh of Masuda, relating to the assessment year 1960-61. It arises out of Income-tax Appeal No. 786/JP of 1972-73 and Cross Objection No. 33/JP of 1972-73 for the assessment year 1960-61. Along with the statement of case, the following two questions of law have been referred to this court for its opinion arising out of the order of the Tribunal in the aforesaid appeal and cross-objection. "(1) Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that the aforesaid estate was different in nature from the estates created by the Crown Grants Act 15 of 1895, and that, as such, the decision of the Privy Council in Rajendra v. Raghubans Kanwar, AIR 1918 PC 25, would not apply to the facts of the present case ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that the business of Vakil and Co. and the immovable properties situated in Masuda, Ramgarh, Vijaynagar and Ajmer which were admittedly part of the impartible estate of Masuda up to July 31, 1955, continued to remain the properties of the impartible estate of Masuda even after the abolition of the Istimrari estate of Masuda by the Ajmer Abolition of Intermediaries and Reforms Act, 1955, and, therefore, the income therefrom was assessable in the hands of the asses-see as individual ?"
(2.) THE facts, as emanating from the statement of case : THE applicant-asses-see was the holder of the Istimrari estate of Masuda, situated in the District of Ajmer. According to the recital recorded in the books of the asses-see dated August 18, 1955, spelling out partition of compensation to be received on resumption of the Istimrari estate of Masuda Thikana and has been the property of family of the assessee for the last 14 generations. On March 29, 1875, Shri Bahadur Singh, the grandfather of the assessee, was the holder of the Thikana Masuda and was paying revenue in respect of the estate to the British Government. On that date, the Governor-General in Council issued a Sanad in favour of the late Shri Bahadur Singh whereby the then British Government waived its right of enhancing the assessment of the estate of Shri Bahadur Singh in future and declared the assessment of the said estate to be fixed in perpetuity. THE Sanad recited that the Istimrardar of Masuda for the time being and holders specified in Schedule "A" shall all time be faithful to Her Majesty the Queen Victoria and this Sanad was prefaced with the object that "whereas the Government and Council has been pleased to waive the right of the British Government to enhance the assessment of your estates and to declare the existing assessment of the said estates to be fixed in perpetuity, therefore, the Sanad was granted to set forth the conditions in consideration of the true and faithful observance and fulfilment of which by the Istimrardar, then holding the estate, to be observed truly and faithfully and his heirs representatives or assignees the concession was made." In other words, the Sanad contained the conditions on the fulfilment of which the concession of freedom from enhancement of revenue was granted in consideration of faithful allegiance to British Crown. Under the conditions of the said Sanad, apart from fixing various rates of Nazranas on succession and for maintenance of canal or irrigation work, constructed or maintained at the expense of the Government it also prohibited the Istimrardar for the time being, from alienating his estate or any portion thereof by lease, mortgage or otherwise for the time extending beyond his own life time. After the grant of the aforesaid Sanad, the Ajmer Land and Revenue Regulation, 1877 (hereafter called, "the Regulation of 1877"), was promulgaged. The Regulation, inter alia, provided so far as succession of Istimrari was concerned, under Section 23 thereof that "when a Istimrardar dies leaving sons or male issue descended from him through males only whether by birth or adoption, or when after the death of an Istimrardar his widow has power to adopt and adopts a son to him, the Istimrari estate shall devolve as nearly as may be according to the custom of the family of the deceased : Provided--First : That the descent shall in all cases be to a single heir, according to the rule of primogeniture." The conditions about adoption were also laid, with which we are not concerned herein this reference. On the death of Shri Bahadur Singh, his eldest son, Shri Vijay Singh, succeeded to the Thikana of Masuda. On his death in 1938, his eldest son, Thakur Narain Singh, the assessee in the present case, succeeded to the aforesaid estate.
(3.) THE ancient impartible estate of Thikana of Masuda which was inherited by the present assessee, the eldest son, at the time of death of his father, consisted of (i) the Istimrari estate consisting of the villages mentioned in Schedule "A" to the Sanad of 1875, (ii) the immovable properties situated in Masuda, Ramgarh, Vijay Nagar and Ajmer, and (iii) the business in the name of Vakil and Co. The income from all these sources was assessed in the hands of the present assessee up to the assessment year 1944-45 as his individual income. In respect of the assessment year 1945-46, the assessment of the income from property in his hands as individual was questioned by the assessee following the decision of the Privy Council in CIT v. Dewan Baha- dur Dewan Krishna Kishore [1941] 9 ITR 695. The present assessee's contention was accepted and a separate assessment for the assessment year 1945-46 was made on him as karta of his Hindu undivided family and he was held be the owner of the immovable properties comprised in the impartible estate. An amendment was brought to Section 9 of the Indian Income-tax Act, 1922, by inserting Sub-section (4) thereto vide Income-tax and Business Profits Tax (Amendment) Act, 1948, with effect from March 30, 1948, whereby it was envisaged that for the purposes of that section the holder of an impartible estate shall be deemed to be the individual owner of all the properties comprised in the estate. As a result of this legal fiction, the income from the immovable properties situated at Masuda, Ramgarh, Vijay Nagar and Ajmer as well as income from profits and gains of Vakil and Co. were again taxed in the hands of the present assessee as individual as it was a common ground at the relevant time that the properties in question formed part of the impartible estate of the Thikana of Masuda, and, therefore, the income therefrom, under whatever head, had to be assessed in the hands of Thakur as his individual income by virtue of Section 9(4)(a) of the Act of 1922. This was continued until May 30, 1955. On May 30, 1955, on account of the enactment of the Ajmer Abolition of Intermediaries and Land Reforms Act, 1955 (hereafter referred to as "Ajmer Act of 1955"), which came into effect with effect from June 23, 1955, the institution of Istimrari was abolished and the Istimrari estate vested in the State in accordance with the terms of the said Act. Before the compensation payable in lieu of resumption of the estate was determined, the assessee, by a deed of partition dated August 18, 1955, the compensation which was payable in lieu of such resumption, divided amongst the members of his family numbering five consisting of himself, his wife and three sons by making a narration of that fact in his books of account. After the Ajmer Act of 1955 came in existence, and the assessee had executed a deed of partition of the compensation payable under the Act, the State of Ajmer, which then was Part "C" State, merged with the State of Rajasthan in accordance with the States Reorganisation Act, 1956, and became part of the State of Rajasthan and with a view to secure uniformity in the revenue laws in the new State of Rajasthan as formed by Section 10 of the States Reorganisation Act of 1956, the Rajasthan Tenancy Act, 1955, and the Rajasthan Land Revenue Act, 1956, as in force in the pre-reorganisation State of Rajasthan, with suitable modifications therein for making it applicable to the territories of erstwhile Abu, Ajmer and Sunil areas, were extended by enacting the Rajasthan Revenue Laws (Extension) Act, 1957 being Act No. 2 of 1958. By this Act, the Revenue Regulation of 1877 as well as the Ajmer Tenancy and Land Records Act, 1950, were repealed. ;