Sovereign immunity and private income: a ruler's personal income from British India remained taxable under the 1922 Act.

A ruler of an erstwhile Indian State was held liable to income tax on personal income accruing or arising in British India under the Indian Income-tax Act, 1922. The binding principle applied was that the ruler's status did not confer sovereign immunity from tax on private income, and the distinction between State income and the ruler's personal income remained material. The fact that the income related to a period before the Constitution came into force did not change the tax position because the assessment was governed by the 1922 Act. The question was answered against the assessee and in favour of the Revenue.

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Issues: Whether the assessee, being the ruler of an erstwhile State, was liable to tax under the Indian Income-tax Act, 1922 on his personal income accruing or arising in British India during the relevant assessment years.

Analysis: The question was concluded by the binding decision of the Supreme Court in the related ruling on the taxation of a ruler's private income. The decisive principle applied was that the status of an Indian ruler is not equivalent to that of a sovereign for the purpose of immunity from income-tax, and that personal income earned in British India remains chargeable under the Act. The fact that the income related to a period before the Constitution came into force did not alter the position, since the assessment was governed by the Indian Income-tax Act, 1922 and the distinction between State income and the ruler's private income remained material.

Conclusion: The assessee was liable to tax on his personal income earned in British India, and the question was answered against the assessee and in favour of the Revenue.

Ratio Decidendi: A ruler of an erstwhile Indian State does not enjoy sovereign immunity in respect of private income earned in British India, and such income is chargeable to tax under the Indian Income-tax Act, 1922.

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