Cash annuity in lieu of village grant held taxable, as it was not a maintenance allowance.

A cash annuity received in lieu of the village of Mota Dahisara was not a maintenance allowance exempt under paragraph 15(i) of the Part B States (Taxation Concessions) Order, 1950. The HC treated the annual payment as having two distinct components: one for the village and another as jiwai or maintenance, and held that the village component arose from a separate grant linked to loss of the village, not from maintenance. Because the original village grant was a bounty rather than maintenance in kind, the amount could not be characterised as an allowance out of public revenues. The sum was therefore taxable.

---

---

Issues: Whether the sum of Rs. 35,807 received by the assessee as cash annuity in lieu of the village of Mota Dahisara was a maintenance allowance exempt under paragraph 15(i) of the Part B States (Taxation Concessions) Order, 1950.

Analysis: The Resolution showed two distinct components of the annual payment: one part in lieu of the village and another as jiwai or maintenance. The surrounding correspondence and the prior grant indicated that the village component was demanded and granted as a separate arrangement connected with the loss of the village, not as maintenance. The village grant itself was treated as a bounty and not as maintenance in kind, and the court declined to recast the transaction by relying on any general substance-over-form approach. On the facts, the payment of Rs. 35,807 could not be characterised as maintenance allowance out of public revenues.

Conclusion: The amount of Rs. 35,807 was not exempt under paragraph 15(i) and was chargeable to tax.

Ratio Decidendi: A payment received in lieu of a village, where the village grant is not maintenance but a bounty, does not qualify as a maintenance allowance exempt from tax under paragraph 15(i) of the Part B States (Taxation Concessions) Order, 1950.

---