RAJA BAHADUR DHAKESWAR PRASAD NARAYAN SINGH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) -

(2.) THIS is an application by Raja Bahadur Dhakeshwar Prasad Narayan Singh for leave to appeal to his Majesty in Council from a judgment of this Court on a case stated by the Commissioner of Income-tax under Section 66 clause (2) of the Income-tax Act. The question which arose was as to the proper deductions to be made for the purpose of ascertaining the assessable income of the assessees, and in these circumstances. It appears from the facts stated by the Commissioner that the assessee purchased from the Maharajadhiraja of Darbhanga a decree for a sum of upwards of Rs. 33,00,000, the consideration of which was partly paid by the execution of a hand-note for Rs. 1,04,936 and also by a zarpeshgi transaction valued at about Rs. 30,50,000. The period of the zarpeshgi was seventeen years and at the time of entering into the transaction the parties prepared an account by which periodical (quarterly) amounts of interest were fixed, which were set off against what was ascertained to be the annual value of the property, the balance being set off against the principal sum from time to time : and by the account it appeared, as I have already indicated, that in a period of seventeen years both the interest and the capital would be liquidated. It appears that the decree which was purchased by the assessee was not executed; but the reason for that does not appear from the record of the case, and we are in no way concerned with it. The contention of the assessee before this Court was that the quarterly sums, which were entered in the account of which I have spoken, being interest to the amount of Rs. 45,750, were sums which were expended by the assessee for purchasing the income which was derived from the decree, that is to say the interest which the decree bore, so long as it was not executed by the assignee of the decree, namely the assessee in this case. I do not propose to restate the reasoning of the judgment in this case, to which I was a party; but it seems to me that the matter is summed up in one observation which was to this effect :-