Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | income tax |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Allowed |
Headnote | Income Tax Act, 1961: Section 2(24 )-Assessee in receipt of compassionate payment in lieu of cash allowance abolished-Payment purely compassionate, discretionary and voluntary, at the request of the assessee- Assessee having no right to demand payment- Absence of any foundation for source of any Income-Whether payment constituted capital receipt and hence not taxable-Whether payment was capital receipt or income depends on nature and quality of payment and source of income and not its nomenclature or periodicity. Bombay Merged Territories Miscellaneous Alienations Abolition Act, 1955: Section 15(1). Interpretation of Statutes-Internal aids-Marginal Heading of a Section--Whether can control meaning of Section, when it is clear and unambiguous. The appellant- assessee, the descendant of the late ruler of Kolhapur State was sanctioned a monthly cash allowance by the successor to the late ruler. After the merger of the princely State with the then State of Bombay, the cash allowance was discontinued, in view of the provisions of the Bombay Merged Territories Miscellaneous Alienations Abolition Act, 1955 which abolished miscellaneous alienations of various kinds prevailings in the merged territories. However, in view of sub-section (1) clause (d) of Section 15 of the Act which provided that a aish allownace could be paid as a compassionate payment notwithstanding the abolition of all alienations under Section 4 of the Ac:t, the assesses continued to receive the cash allowance on modified terms. This amount was also reduced subsequently on account of misappropriation of a part of the trust amount deposited in a Bank. For the assessment years 1963-64 and 1964-65 the assessee received Rs.36,000 and Rs.33,992 respectively. The contention of the assessee that these receipts were of a capital nature and, therefore, would not be subject to income tax, was negatived by the Income Tax Officer, and the amounts were assessed to tax in each of the assessment years. The assessee's appeals against the Income Tax Officer's orders were rejected by the Appellate Assistant Commissioner, as well as the Appellate Tribunal. On a reference made to it, the High Court upheld the decision of the taxing authorities and the Tribunal that the amounts received by the assessee during the two· relevant financial years were income within the meaning of Income Tax Act and that they could not be regarded as capital receipts in the hands of the assessee. Hence the assessee filed appeals, by special leave, before this Court not only in respect of the aforesaid assessment years, but also in respect of the assessment years 1965-66 to 1969-70. On behalf of the appellant-assessee it was contended that where any cash allowance, which was included in the definition of alienation was granted under Section 15(1)(d) of the Bombay Merged Territories Miscellaneous Alienation Act, the said payment was on compassionate ground, and was entirely different from those allowances paid under clauses (i),(ii) and (iii) of the Section, and therefore, the High Court was not correct in holding that it was a receipt of revenue and would not amount to compensation when the statute declares otherwise, and that the interpretation of Section 15 ran counter to the spirit of the Section. On behalf of the respondent-Revenue, it was contended that if it was not windfall and if there was regularity in payment, that would be enough to constitute income; that where the assessee was paid maintenance allowance periodically it could not be claimed as compensation; and that though the marginal heading of the Section was compensation that did not control the operation of the Section or the interpretation of Section 15. |
Judge | Hon'ble Mr. Justice S. Mohan |
Neutral Citation | 1992 INSC 120 |
Petitioner | Shrimant Padmaraje R. Kadambande |
Respondent | Commissioner Of Income Tax, Pune |
SCR | [1992] 2 S.C.R. 705 |
Judgement Date | 1992-04-22 |
Case Number | 2201 |
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