Deeming fiction for remittances from a non-resident husband makes resident-wife allowances taxable; separate state payments were not personal income.

Section 4(2) of the Income-tax Act, 1922 created a deeming fiction under which remittances received in British India by a resident wife from a non-resident husband were treated as income accruing in British India, so the Kalsia allowances were assessable in her hands. Repeated payments from Nabha State were not shown to be the wife's personal income and did not fall within that deeming rule, so they were not assessable as such under the Act. The claim to immunity under the canons of international law was rejected because no legal basis extended the ruler's immunity to the wife in respect of income accruing, arising or received in British India.

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Issues: (i) Whether allowances received from Kalsia State by a wife resident in British India were remittances deemed to be her income accruing in British India; (ii) whether moneys received from Nabha State constituted her personal income assessable under the Indian Income-tax Act, 1922; (iii) whether, by reason of being the wife of the Ruling Chief of Kalsia, she was exempt under the canons of international law from taxation in respect of her income accruing, arising or received in British India.

Issue (i): Whether allowances received from Kalsia State by a wife resident in British India were remittances deemed to be her income accruing in British India.

Analysis: The statutory rule under Section 4(2) of the Income-tax Act, 1922 applied where the husband was not resident in British India and the wife, resident in British India, received remittances out of income not included in the husband's total income. The payments from Kalsia were received by the assessee from her non-resident husband out of State income, and the provision created a statutory deeming fiction treating such remittances as income accruing in British India to the wife. The casual or non-recurring character of the payments did not affect the operation of the deeming provision.

Conclusion: Yes. The allowances from Kalsia State were to be deemed her income accruing in British India, and they were assessable in her hands.

Issue (ii): Whether moneys received from Nabha State constituted her personal income assessable under the Indian Income-tax Act, 1922.

Analysis: The payments from Nabha were not remittances from the husband and therefore did not fall within the special deeming rule. Their taxability depended on whether, on the facts, they answered the ordinary meaning of income under the charging provisions. The repeated payments over a long period were examined as to source, regularity, and character. On the facts found, the sums from Nabha were held not to constitute the assessee's personal income assessable under the Act.

Conclusion: No. The moneys received from Nabha State did not constitute her personal income assessable under the Indian Income-tax Act, 1922.

Issue (iii): Whether, by reason of being the wife of the Ruling Chief of Kalsia, she was exempt under the canons of international law from taxation in respect of her income accruing, arising or received in British India.

Analysis: The claim to immunity was examined in the context of the legal status of an Indian ruling chief and the extent, if any, to which sovereign immunity or extraterritoriality extended to the ruler's wife. The Court did not accept that the wife's position attracted the same immunity in the absence of any legal basis showing that such protection extended to her in British India.

Conclusion: No. The assessee was not exempt under the canons of international law from taxation in respect of whatever was, or was deemed to be, her income in British India.

Final Conclusion: The reference was answered by holding that the Kalsia receipts were taxable on a deemed basis, the Nabha receipts were not assessable as the assessee's personal income, and no international-law immunity protected the assessee from British Indian income-tax.

Ratio Decidendi: Where the statute creates a specific deeming fiction for remittances received in British India by a resident wife from a non-resident husband, the remittances are taxable as income by force of the provision; and recurring voluntary payments from another source are not assessable unless their character as income is shown on the legal and factual material before the Court.

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