RAJA J RAMESHWAR RAO Vs. COMMISSIONER OF INCOME TAX HYDERABAD

JUDGEMENT

(1.) This is an assessee's appeal, with the special leave of this Court, against a judgment of the High Court of Andhra Pradesh on a reference under S. 82(1) of the Hyderabad Income-tax Act, corresponding to S. 66(1) of the Indian Act. The Tribunal referred four questions of law arising out of its order; but we are concerned only with questions Nos. 2 and 3 to be mentioned later.

(2.) The assessee, Raja J. Rameshwar Rao, is a Jagirdar of the Wanaparthi Samasthan in the former State of Hyderabad. He was being assessed as an individual on income from the Jagir and from other sources. In his Jagir, there was a village, Madanapur by name. In the year of account 1940 (1346 Fasli) corresponding to the year of assessment, 1947 (1357 Fasli), he acquired the Makhta of the village for Rs.25,000/-. He also purchased 217 acres of land from the pattadars, paying them in the year of account, Rs. 19,186/- out of a total consideration of Rs.25,502/-. He constructed on a portion of the land so acquired a Ganj and shops. The rest of the land he laid out as plots, which he sold for Rs. 75,820/-. In Computing his assessable income, Rs. 75,820/- were added as receipt from business. He appealed to the Appellate officer and the Tribunal, but without success. His appeals contained many other matters, with which we are not concerned; but he claimed that Rs.75,820/- could not be included in his assessable income and also that the expenses amounting to Rs.70,686/- (Rs.25,000 plus Rs.19,186/- plus Rs. 26,500/-) should be deducted as allowable expenses within the meaning of S. 14 (5)(a) of the Hyderabad Income-tax Act.

(3.) The questions which were referred by the Tribunal to the High Court were: