SIR RAJENDRA NARAYAN BHANJ DEO Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) THE appellant was at the date of his assessment for income-tax for the year ending March 31, 1932, the proprietor of an estate known as the Kanika Raj or Killah Kanika situate in and forming part of the tract of land formerly known as the Rajwara Orissa. This estate is hereinafter referred to as Kanika. THE assessment was made by an order dated March 11, 1932, by the appropriate Income-tax officer. In making it the officer took into account certain sums accruing to the appellant by virtue of his ownership of Kanika from sources admitted to be non-agricultural.

(2.) THE appellant in due course appealed to the Assistant Commissioner of Income-tax against this assessment upon the ground (among others) that all income which accrued to him by virtue of the ownership of Kanika was exempted from liability to income-tax by virtue of a Treaty engagement, kaoolnama, made on November 22, 1803, by a predecessor in title to Kanika with the Commissioners of the East India Company for the Soobah of Cuttack. On October 13, 1932, the Assistant Commissioner rejected the appellant's contention with regard to the Treaty. By petition dated November 23, 1.932, the appellant requested the respondent, who is the Commissioner of Income-tax for Bihar and Orissa, to refer to the High Court under the provisions of Section 66 (2) of the Indian Income-tax Act, 1922, the question "whether on the terms of the kaoolnama dated November 22, 1803, the petitioner's (i.e. the appellant's) incomes from his Kanika Raj are exempt from taxation under the Indian Taxation Act, 1922 ? " THE reference to the Indian Taxation Act, 1922, is admittedly a clerical error for the Indian Income-tax Act, 1922 (hereinafter referred to as "THE Act"). THE respondent on July 17, 1934, refused the appellant's request, and on February 6, 1935, the appellant presented a petition to the High Court of Patna under Section 66 (3) of the Act for an order requiring the respondent to refer the question set out above to that Court. On February 21, 1935, the High Court ordered the respondent to state a case raising the said question for the decision of of the Court.

(3.) PARAGRAPH 12 of the statement continues as follows: Immediate settlement could not be made of this estate" (i.e. Kanika) "when this Regulation " (i.e. Regulation XII of 1805) " was promulgated because at that time the Raja of Kanika had been deprived of his estate, but it was conformably to the provision of Clause 3 of Section XXXV that the jama of Killa Kanika (spelt Cunca in the Regulation) was subsequently settled. Although the amount of jama payable by the estate was fixed at the same amount as in the kaoolnama all the other conditions of the kaoolnama were not renewed, e.g. the power of the Raja to maintain troops was taken away. The assessee (i.e. the appellant) therefore holds ' the estate not by virtue of the kaoolnama but by the subsequent settlement made with him.