TaxTMI 
TaxTMI 
1971 (9) TMI 2
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....irm deriving income from interest on securities, property, business and other sources. Some time in the year 1946 it purchased the Nedous Hotel in Lahore for a sum of Rs. 46 lakhs. For that purpose it raised a loan of Rs. 30 lakhs from M/s. Bharat Bank Ltd., Lahore, and a loan of Rs. 18 lakhs from the Raja of Jubbal. The loan taken from the bank was partly repaid but as regards the loan taken from the Raja, the assessee came to an agreement with the Raja under which the Raja accepted a half share in the said property in lieu of the loan advanced and also 1/3rd of the outstanding liability of the bank. This arrangement came into effect on November 1, 1951. After the creation of Pakistan, Lahore became a part of Pakistan. The Nedous Hotel was declared an evacuee property and, consequently, vested in the Custodian in Pakistan. In its return for the relevant assessment years, the assessee claimed losses of Rs. 1,00,723, Rs. 1,16,599 and Rs. 1,16,599, respectively, but showed the gross annual letting value from the said property at nil. The loss claimed was stated to be on account of interest payable to the bank. Since the property in question had vested in the Custodian of Evacuee P....
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....ons of the Ordinance and thereafter analyse the effect of those provisions. The long title of the Ordinance says that it is an Ordinance to provide for the administration of the evacuee property in Pakistan and for certain matters incidental thereto. The Preamble says that : " Whereas an emergency has arisen which renders it necessary to provide for the administration of evacuee property in Pakistan and for certain matters incidental thereto " Section 6(1) provides that all evacuee property shall vest and shall be deemed always to have vested in the Custodian with effect from the 1st day of March, 1947. Section 9 gives power to the Custodian to take possession of the evacuee property. Section 11 provides that any amount due to an evacuee or payable in respect of any evacuee property, shall be paid to the Custodian by the person liable to pay the same and the payment to the Custodian discharges the debtor's liability to the extent of the payment made. Section 12 prescribes that the property which has vested in or of which possession has been taken by the Custodian shall be exempt from all legal process, including seizure, distress, ejectment, attachment or sale by any offic....
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....t it is an Ordinance to provide for the administration of evacuee property and not management of evacuee property. The expression "administration", in relation to an estate, in law means management and settling of that estate. It is a power to deal with the estate. The evacuee could not take possession of his property. He could not lease that property. He could not sell that property without the consent of the Custodian. He could not mortgage that property. He could not realise the income of the property. On the other hand, the Custodian could take possession of that property. He could realise its income. He could alienate the property and he could under certain circumstances demolish the property. All the rights that the evacuee had in the property he left in Pakistan were exercisable by the Custodian excepting that he could not appropriate the proceeds for his own use. The evacuee could not exercise any rights in that property except with the consent of the Custodian. He merely had some beneficial interest in that property. No doubt that residual interest in a sense is ownership. The property having vested in the Custodian, who had all the powers of the owner, he was the legal ow....
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....owns Insolvency Act, 1909, certain house property of the insolvent vested in the official assignee. The question arose whether the official assignee could be taxed in respect of the income of the property under section 9. The High Court held that the property did not by reason of the adjudication of the debtor cease to be a subject fit for taxation and, in view of the provisions of section 17 of the Presidency Towns. Insolvency Act, the official assignee was the "owner" of the property and he could rightly be assessed in respect of the income from that property under section 9. Section 17 of the Presidency Towns Insolvency Act reads : " On the making of an order of adjudication, the property of the insolvent wherever situate shall vest in the official assignee and shall become divisible among his creditors, and thereafter, except as directed by this Act, no creditor to whom the insolvent is indebted in respect of any debt provable in insolvency shall, during the pendency of the insolvency proceedings, have any remedy against the property of the insolvent in respect of the debt or shall commence any suit or other legal proceedings except with the leave of the court and on such te....
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..... The claim arose in the following circumstances : The respondent was declared insolvent in 1921. He was then the owner of charitable properties. His insolvency lasted till May 10, 1926, when he received his discharge on payment of composition and was reinvested in his estate. At that time his estate consisted of, (1) two of the original charitable properties which had not been realised by the trustees in the insolvency and, (2) a balance in cash of pound 53 odd. During the insolvency, the trustee paid income-tax on the full annual value of the two properties in question. The contention of the respondent was that the radical right to these properties was in him all the time, and that, in paying the tax, the trustee was really paying it on his behalf--that is, on his income--and that, consequently, there arose in each of the years in which the payment was made a right to deduct his "personal allowance" from the annual value of the properties. The right to this abatement is said to have passed to the respondent himself in virtue of the reinvestment in his estate which occurred upon his discharge on composition. Rejecting this contention the Lord President observed : " It is obv....
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....stodian and that he had been conferred with large powers to deal with it, an evacuee from Pakistan who owned that property before he migrated to India still continued to be the owner of the property. For this contention of his he placed reliance on some of the observations of this court in Amar Singh v. Custodian, Evacuee Property, Punjab. Therein, delivering the judgment of the court, Jagannadhadas J. observed (at page 815 of the report) : " Stopping here it will be seen that the position, in its general aspect, is that all evacuee property is vested in the Custodian. But he evacuee has not lost his ownership in it. The law recognised his ultimate ownership subject to certain limitations. The evacuee may come back and obtain return of his property, as also an account of the management thereof by the Custodian." Those observations have to be understood in the context in which they were made. Therein, their Lordships were considering whether the right of an evacuee in respect of the property left by him in the country from which he migrated was property right for the purpose of article 19(1)(f) of the Constitution. No one denies that an evacuee from Pakistan has a residual rig....
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....d of supporting the case of the appellant may lend some support to the contention of the revenue. Reliance was next placed on the decision of the Calcutta High Court in Nawab Bahadur of Murshidabad v. Commissioner of Income-tax. The facts of that case were : Properties which belonged to the ancestors of the Nawab of Murshidabad as rulers were, some time after the territories had been conquered by the British, settled by the Secretary of State for India in the year 1891 on the then Nawab of Murshidabad under a deed of settlement which provided that such properties "shall henceforth and for ever be held and enjoyed by the said Nawab Bahadur and such one among his lineal male heirs as may be successively entitled to hold the said title in perpetuity, with and subject to the incidents, powers, limitations and conditions as to the inalienability and otherwise hereinafter contained". One of the conditions was that he was not entitled to sell or alienate the properties except with the approval of the Governor of Bengal. The settlement deed was confirmed by Act XV of 1891. The question arose whether the Nawab of Murshidabad was liable to pay tax in respect of the income of those prop....