Strict proof required for merged-state pension exemption: maintenance allowance to a claimant was held taxable, not exempt.

An exemption for pension under paragraph 13(iii) of the Merged States (Taxation Concessions) Order, 1949 applies only where the recipient proves both that he was a subordinate chief of a merged State and that the payment was a pension payable in that capacity immediately before 1 August 1949. The monthly amount in question was found to be a maintenance allowance linked to marriage and family status, not a pension for past services. The claimant produced no material establishing subordinate-chief status, and an ex-Ruler's certificate could not convert the allowance into exempt pension income. The allowance therefore remained taxable and no exemption was available.

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Issues: Whether the monthly allowance of Rs. 12,000 received by the assessee was exempt from income-tax under paragraph 13(iii) of the Merged States (Taxation Concessions) Order, 1949, as a pension received by him as the subordinate chief of the Ruler of a merged State.

Analysis: Paragraph 13(iii) granted exemption only where the receipt was a pension paid out of public revenues to a person in the capacity of subordinate chief of the Ruler of a merged State, and the amount was payable in that capacity immediately before 1 August 1949. The allowance granted to the assessee by the order of 18 November 1943 was a maintenance allowance connected with his marriage and family status, not a pension for past services. The expression "subordinate chief" was held not to depend on blood relationship or succession rights, but on a distinct feudal or territorial status. The assessee produced no material showing that he held such status or that the amount was payable to him as subordinate chief immediately before the relevant date. The certificate from the ex-Ruler did not establish the necessary legal status or convert the maintenance allowance into a pension.

Conclusion: The allowance did not satisfy the conditions of paragraph 13(iii) and was not exempt from tax. The issue was decided against the assessee and in favour of the Revenue.

Final Conclusion: The reference was answered by holding that the allowance formed part of the assessee's taxable income and no exemption under the Merged States (Taxation Concessions) Order, 1949 was available.

Ratio Decidendi: An exemption provision granting relief for pension to a subordinate chief of a merged State must be strictly satisfied by proof of both the recipient's legal status as subordinate chief and the character of the payment as a pension payable in that capacity immediately before the cut-off date; a maintenance allowance or family support grant does not qualify.

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