1945 (12) TMI 1 - HC - Income Tax

Tax Ruling: Assessing Income from State Allowances under Income-tax Act

Rani Amrit Kunwar Versus Commissioner of Income Tax, C.P. and others

The court held that the allowances received by the assessee from the Kalsia State were deemed to be her income accruing in British India under Section ... - Issues Involved:1. Whether the allowances received by the assessee from the Kalsia State constitute her personal income assessable under the Indian Income-tax Act.2. Whether the allowances received by the assessee from the Kalsia State are of a casual and non-recurring nature and thus exempt under Section 4(3)(vii) of the Act.3. Whether the moneys received by the assessee from the Nabha State constitute her personal income assessable under the Indian Income-tax Act.4. Whether the moneys received by the assessee from the Nabha State are of a casual and non-recurring nature and thus exempt under Section 4(3)(vii) of the Act.5. Whether, by reason of her being the wife of the Ruling Chief of Kalsia, the assessee is exempt under the canons of international law from taxation under the Indian Income-tax Act in respect of her personal income accruing, arising, or received in British India.Issue-wise Detailed Analysis:1. Assessability of Allowances from Kalsia State:The court examined whether the allowances received by the Rani from the Kalsia State were her personal income assessable under the Indian Income-tax Act. It was found that the Rani received Rs. 14,744 from Kalsia State for household and living expenses and the education of her children. The court noted that these payments were made consistently over almost twenty years and were included in the State budget. The court held that these payments were 'remittances received by' the Rani and thus, under Section 4(2) of the Income-tax Act, were deemed to be part of her income accruing in British India. Therefore, the allowances received from Kalsia State were deemed to be her income.2. Casual and Non-Recurring Nature of Allowances from Kalsia State:The court concluded that since the payments from Kalsia State were deemed to be income under Section 4(2) of the Act, there was no need to consider whether they were of a casual and non-recurring nature under Section 4(3)(vii). The court emphasized that Section 4(2) raises an absolute presumption that remittances from a husband to a wife are taxable as income, irrespective of their actual character.3. Assessability of Moneys from Nabha State:The court examined whether the moneys received by the Rani from Nabha State, totaling Rs. 8,910, constituted her personal income assessable under the Indian Income-tax Act. The payments from Nabha State were described as a 'wardrobe allowance' and festival presents. The court found that there was no evidence of any 'vested right' or enforceable obligation for these payments. Therefore, the court concluded that the payments from Nabha State did not constitute the Rani's income assessable under the Act.4. Casual and Non-Recurring Nature of Moneys from Nabha State:The court determined that the payments from Nabha State were voluntary and depended entirely on the will of the Maharaja of Nabha. The court held that these payments were of a casual and non-recurring nature and thus exempt under Section 4(3)(vii) of the Act. The court emphasized that the payments were not bound to recur and were not enforceable by the Rani, making them casual and non-recurring.5. Exemption under International Law:The court considered whether the Rani, by reason of being the wife of the Ruling Chief of Kalsia, was exempt under international law from taxation under the Indian Income-tax Act. The court held that there was no authority to extend the incidents of the domestic sovereignty of the Ruler of Kalsia State to his wife. The court concluded that the Rani was not exempt from taxation under international law in respect of her personal income accruing, arising, or received in British India.Conclusion:1. The allowances received by the assessee from the Kalsia State during the accounting year should be deemed to be her income accruing in British India. No question arises in this case whether they are of a casual and non-recurring nature.2. The moneys received by the assessee from the Nabha State during the accounting year do not constitute her personal income assessable under the Indian Income-tax Act.3. The assessee, by reason of her being the wife of the Ruling Chief of Kalsia, is not exempt under the canons of international law from taxation under the Indian Income-tax Act in respect of whatever is, or is deemed to be, her income accruing, arising, or received in British India.