Privy purse receipts were held not to be taxable income under the Income-tax Act, 1961.

Receipts under a privy purse arrangement were held not to constitute taxable income under the Income-tax Act, 1961, where the High Court followed its earlier decision on an identical reference and found no contrary Supreme Court or binding High Court authority. The Court accordingly treated the prior ruling as governing and concluded that the amounts received by the assessee were not liable to tax. The reference was answered in favour of the assessee and against the Revenue.

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Issues: Whether the amounts received by the assessee from the privy purse arrangement constituted income liable to tax under the Income-tax Act, 1961.

Analysis: The Court adopted the reasoning previously applied in an identical reference and held that the receipts in question did not represent taxable income in the hands of the assessee. The Court treated the earlier decision as governing the present case and found no contrary authority from the Supreme Court or the same High Court to depart from that view.

Conclusion: The receipts of Rs. 60,000 each for the assessment years 1968-69 and 1969-70 and Rs. 84,000 and Rs. 50,000 for the assessment years 1970-71 and 1971-72 did not constitute the assessee's income liable to tax, and the reference was answered in favour of the assessee and against the Revenue.

Ratio Decidendi: Receipts forming part of a privy purse arrangement, in the circumstances considered, do not automatically constitute taxable income under the Income-tax Act, 1961.

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