1962-VIL-140-BOM-DT

Equivalent Citation: [1963] 49 ITR 594 (Bom)

BOMBAY HIGH COURT

Income-tax Reference No 61 of 1961

Dated:18.10.1962

HH. MAHARANI SHRI VIJAYKUVERBA SAHEB OF MORVI AND ANOTHER

Vs

COMMISSIONER OF INCOME-TAX, BOMBAY CITY II

Bench

Y. S. TAMBE C.J. (AG.) AND V. S. DESAI, J.

STATEMENT OF CASE

By these four applications (which are consolidated for the sake of convenience), the administrator of the estate of the late H.H. Maharaja Sir Lukhdhirji Bahadur of Morvi, the assessee, requires the Appellate Tribunal to refer to the High Court some questions said to be of law and which are said to arise out of its orders under section 33(4) made on August 22, 1960, in I.T.A. Nos. 4149, 4150, 4151 and 4152 (all by the assessee) and I.T.A. No. 3968 (an appeal by the department), all of 1959-60. Inasmuch as, in our opinion, a question of law does arise out of the aforesaid orders, we hereby draw up a statement of the case and refer it to the High Court of Judicature at Bombay under section 66(1) of the Indian Income-tax Act, 1922.

2. These reference applications arise out of the assessments made upon the assessee for the assessment years 1950-51, 1951-52, 1952-53 and 1953-54, the corresponding previous years being the financial years ended March 31, 1950, 1951, 1952 and 1953. The applicants require the Tribunal to refer to the High Court one question which is common to all the four years and one more question which is peculiar to the assessment year 1953-54 and arising out of the Tribunal's order in the department's appeal, I.T.A. No. 3968 of 1959-60. The common question is in regard to the assessee's claim to deduct professional charges of Rs 500 paid to J.K. Doshi&Co., chartered accountants. The question peculiar to the assessment year 1953-54 is in regard to the assessability of a sum of Rs 1,20,000.

3. At one time, H.H. Maharaja Sir Lukhdhirji Bahadur of Morvi was the ruler of the erstwhile Indian State of Morvi. He abdicated the Gadi in favour of his son, H.H. Maharaja Mahendrasinhji on 21st January, 1948. The father Maharaja died on May 4, 1957, leaving behind him a will according to which his son, H.H. Maharaja Mahendrasinhji, was the sole executor. The said sole executor also died on August 17, 1957, leaving behind him his will which appointed certain persons as executors thereof. Since the estate of the father Maharaja was not completely administered by them, the executors of the will of the son Maharaja became administrators of the estate of the late H.H. Maharaja Sir Lukhdhirji and that is how these administrators came to be concerned in the income-tax proceedings and these reference applications.

4. H.H. Maharaja Sir Lukhdhirji Bahadur engaged the services of J.K. Doshi&Co., chartered accountants, to get his income-tax assessments settled by the income-tax department. It appears that even after his death his executor, H.H. Maharaja Mahendrasinhji, and later the administrators, continued to draw upon the services of the said firm. The firm was to be paid Rs 300 for services rendered by it in getting the assessment settled for each assessment year. The substantial portion of income brought to tax for these four assessment years consists of interest on securities (section 8), dividends and interest on bank current accounts (section 12). The sum of Rs 500 was not claimed as a deduction in the computation of income from a source under a particular head but it was a consolidated claim for a deduction in the computation of income from several sources falling under several heads. It was common ground between the department and the assessee that the latter did not maintain any accounts and as such the provisions of section 13 would not come into operation for the purpose of computing income from a particular source falling under section 12 and, if any, under section 10. The claim for deduction of Rs 500, say, in the computation of the income of the previous year ended March 31, 1950, was founded on the sole ground that though the firm was to render professional services very much later after March 31, 1950, in getting the assessment completed for the assessment year 1950-51, the subject-matter of the computation related to the account year ended March 31, 1950. At one time, it was alleged that the assessee incurred liability to pay the said sum of Rs 500 in the account year ended March 31, 1950, itself. That allegation, however, remained unproved and, as a matter of fact, was not persisted in in the later stages of the proceedings. It is also common ground that the sum of Rs 500 was not paid by the assessee to the firm of chartered accountants in the year ended March 31, 1950. On these facts the Income-tax Officer rejected the claim for deduction of Rs 500 for each of the years in the computation of income of the account years ended March 31, 1950, 1951, 1952 and 1953. The department was prepared to allow such expenses either on "actual payment basis" or on "incurred liability basis". In appeal, the Appellate Assistant Commissioner directed that such expenses should be allowed by the Income-tax Officer in the year in which "relevant bills for the charges were presented to the appellant" by the firm of chartered accountants. Being dissatisfied with the said direction, the matter was brought in appeal to the Tribunal. Having regard to the facts mentioned above, the Tribunal found no reason to interfere with the direction given by the Appellate Assistant Commissioner which it characterised as "quite reasonable and fair particularly in a case of 'no accountants'". This contention of the assessee has been dealt with by the Tribunal in paragraph 6 of its main order, in I.T.A. No. 4149 of 1959-60, a copy of which is marked annexure "A" and forms part of the case.

5. On these facts, the assessee requires the Tribunal to refer the following question to the High Court for each of the four years 1950-51, 1951-52, 1952-53 and 1953-54:

                  "Whether the accountant's fees are allowable in the respective years in which they were claimed by the applicants?"

This question hardly brings out the real controversy between the assessee and the department. In our opinion, on the facts set out in the preceding paragraphs, the following question arises and though we frame it in relation to account year ended March 31, 1950, it would hold good mutatis mutandis for the account years ended March 31, 1951, March 31, 1952, and March 31, 1953:

                 "Whether the sum of Rs 500 can be deducted in arriving at the total income of the 'previous year' ended March 31, 1950, when it was neither paid in that year nor any liability to pay it was incurred in that year though it related to professional services to be rendered at some future date after March 31, 1950?"

We refer the above question accordingly.

6. Next, the facts having bearing to the more important question, viz., liability to pay tax on the receipt of Rs 1,20,000 for the assessment year 1953-54. The material facts are these. As already stated, H.H. Maharaja Sir Lukhdhirji Bahadur abdicated the Gadi of Morvi in favour of his son, H.H. Mahendrasinhji on 21st January, 1948. From a statement placed before the Tribunal at the time of hearing of the appeals, it was found that a sum of Rs 10,000 was being paid each month by the son Maharaja to the father Maharaja at some time during it from April, 1949, onwards. Occasionally where the payment could not be made each month, the sum was paid in arrears. The statement also showed instances where a sum of Rs 10,000 was paid in advance. The said statement also showed that a sum at the monthly rate of Rs 10,000 was paid for the period April, 1949, to October, 1953. The Tribunal was assured on behalf of the assessee that no such payment was made for the period November, 1953, to April, 1954, though the department did not accept that position. The Tribunal also found that since April, 1954, the payments were being made on quarterly basis at the rate of Rs 30,000 per quarter and such payments continued to be made between April, 1954, to April, 1957, and they ceased thereafter as H.H. Maharaja Sir Lukhdhirji Bahadur died on May 4, 1957. Thus in the account year ended March 31, 1953, the father Maharaja received a sum of Rs 1,20,000 from the son Maharaja. In response to certain enquiries made by the Income-tax Officer in regard to the said monthly payment of Rs 10,000, a letter dated January 16, 1954, was addressed by J.K. Doshi & Co., chartered accountants, to him, a copy of which is marked annexure "B" and forms part of the case. It stated as follows:

               "Moreover, amount of personal allowance of Rs 10,000 per month allowed by H.H. Shri Mahendrasinhji to his father was always transferred from the above referred joint account to the personal account of Sir Lukhdhirji."

The said firm of chartered accountants wrote another letter on June 27, 1957, to the Income-tax Officer, copy of which is marked annexure "C" and forms part of the case. It contains the following:

               "It may further be observed that on the abdication of His Highness Maharaja Sir Lukhdhirji Bahadur on January 21, 1948, His Highness was being paid at Morvi Rs 10,000 per month by way of Jiwai."

It will be observed that while at one place the monthly sum of Rs 10,000 has been described as Jiwai, i.e., by way of maintenance allowance, in another place it has been described as "personal allowance".

7. The contention raised before the Income-tax Officer by Mr. J.K. Doshi of Messrs. J.K. Doshi&Co., chartered accountants, was that the said sum of Rs 1,20,000 was not a taxable receipt. The Income-tax Officer disposed of this contention by observing as follows:

"The assessee has not shown Rs 1,20,000 received by him from H.H. Shri Mahendrasinhji as annuity in the return of income. The assessee's accountant claims that it is Jiwai allowance of Rs 10,000 per month received by the assessee from H.H. Shri Mahendrasinhji and is exempt from tax. Shri J.K. Doshi, accountant of the assessee, has not put forward any specific grounds on which the exemption is claimed. He stated that it is customary but there is nothing in the Indian Income-tax Act, 1922, which exempts a customary payment from tax. It is for the assessee to prove that the exemption is available to him under the Income-tax Act. The assessee has failed to satisfy me regarding the claim for exemption. Simply by stating that the Jiwai was fully exempt, the assessee cannot get exemption. In fact, this allowance is received by him every month and it is in the nature of annuity taxable under the Act."

8. Being aggrieved by the Income-tax Officer's inclusion of the said sum of Rs 1,20,000 in the computation of the total income, the assessee went in appeal to the Appellate Assistant Commissioner. By that time, Mr. N.A. Palkhivala, advocate, came on the scene and appeared before him. Mr. Palkhivala contended before the Appellate Assistant Commissioner that the payments made to the father Maharaja by the son Maharaja were ex gratia payments made "at the rate of Rs 10,000 each month", that they were made "without legal obligation and there is not even any customary binding". It will thus be seen that while the position taken by the accountant, Shri J.K. Doshi, before the Income-tax Officer was that the sum of Rs 10,000 was by way of maintenance allowance and that it was customary to make such allowance by the ruling chief to relations, Mr. Palkhivala took the position as described above and shifted the ground for exemption before the Appellate Assistant Commissioner. In support of the claim for exclusion of the said sum, Mr. Palkhivala relied upon the Allahabad High Court decision in the case of Rani Amrit Kunwar [1946] 14 I.T.R. 561. In accepting his contention, the Appellate Assistant Commissioner observed as follows:

"In view of the above decision and as there is not even any customary obligation for payment of the amount to the appellant by his son on the former's abdication in favour of the latter, I agree with the learned representative that the amount cannot be taxed as income."

9. Being aggrieved by the decision of the Appellate Assistant Commissioner on the said point, the department brought the matter in appeal to the Tribunal, the contention raised before it being:

                "The Appellate Assistant Commissioner erred in deleting a sum of Rs 1,20,000 which was assessed by the Income-tax Officer as jiwai in the hands of the assessee."

Before the Tribunal, Mr. Palkhivala, counsel for the assessee, took strong objection to the use of the words such as jiwai or "annuity" to describe the said sum of Rs 1,20,000 though he added that the description would not hurt him. The two contentions before it were:

(i) That the said sum of Rs 1,20,000 did not represent any "income" at all; and

(ii) that if at all it was "income" received and falling within the ambit of the Income-tax Act, it was exempt under section 4(3)(vii) on the ground that it was of a casual and non-recurring nature.

10. On the other hand, the department's contention was that the monthly payment of Rs 10,000 represented a customary payment made by the ruling chief to a relation of his for his maintenance, that after the father Maharaja abdicated the Gadi in favour of the son Maharaja, the position became reversed and the said jiwai allowance was being paid by the son-Maharaja to the father Maharaja. Since the payment was being made in accordance with custom and usage that itself provided a source for the said sum for being an "income" and that this being a periodic and customary payment, it could not be considered as receipt of a casual and non-recurring nature. In support of these contentions, the departmental representative strongly relied upon:

(i) Statement made by the assessee's authorised representatives, J.K. Doshi&Co., in their letter of January 16, 1954 (annexure "B").

(ii) Statement made by them in their letter of August 27, 1957 (annexure "C").

(iii) The following note appearing in the return made for 1948-49 by H.H. Maharaja Shri Mahendrasinhji of Morvi when he was in receipt of a monthly payment of Rs 10,000 from the then ruling chief, H.H. Maharaja Sir Lukhdhirji Bahadur:

            "His Highness who was a Yuvaraja up to January 21, 1948, received a jiwai at Morvi of Rs 10,000 per month which is not taxable."

For reasons given by the Tribunal in paragraphs 13 and 14 of its order in I.T.A. No. 4149 of 1959-60 (annexure "A"), the Tribunal rejected the contention of Mr. Palkhivala and accepted those of the department. At this stage, it is necessary to make certain observations as to what happened before the Tribunal at the time of hearing. As already stated, the monthly sum of Rs 10,000 was described as jiwai or "personal allowance" by J.K. Doshi&Co., in their letters addressed to the Income-tax Officer. There was, as a matter of fact, no dispute whatever in regard to the nature of the said sum before him and this is abundantly clear from the extract reproduced above from the Income-tax Officer's assessment order--vide paragraph 7 above. It was for the first time before the Appellate Assistant Commissioner that Mr. Palkhivala shifted the ground as he did and as described above in regard to the nature of the said sum. When the matter came before the Tribunal, he bitterly complained that in its appeal to the Tribunal, the department was putting forth a new factual case for the first time when it sought to assess the sum of Rs 1,20,000 as customary payment made by the ruling chief to a relation of his for his maintenance. The Tribunal did not accept this submission made by Mr. Palkhivala that the department was taking a new position before the Tribunal for the first time and it was pointed out to him that there was really no dispute before the Income-tax Officer in regard to the nature of the said sum which has been described on more than one occasion by the assessee's authorised representatives, J.K. Doshi&Co. Here the assessee preferred to disown what was written by the said chartered accountants, J.K. Doshi&Co., in their letter of August 27, 1947 (annexure "C"), by pointing out that the said accountants "had no authority to represent the assessee because H.H. Maharaja Sir Lukhdhirji died on January 4, 1957". Hence, without accepting Mr. Palkhivala's contention that the department was trying to make out a new case altogether before the Tribunal in its own appeal, a suggestion was thrown by the Bench that "the case might go back for investigation of facts". Incidentally some other facts would have also been investigated, viz., the assurance given to the Tribunal by Mr. Palkhivala that there was no monthly payment for the period November, 1953, to April, 1954, but Mr. Palkhivala preferred to oppose the said suggestion "on the ground that there were no more facts to be found and hence the remand was quite unnecessary". In these circumstances, the Tribunal preferred to decide the contention on the material that was on record and before it and, as already stated, accepted the department's appeal.

11. On these facts, the assessee requires the Tribunal to refer the following two questions to the High Court for the assessment year 1953-54:

             "(i) Whether the amount of Rs 1,20,000 stated to have been received by H.H. Lukhdhirji from H.H. Mahendrasinhji for the assessment year 1953-54 is at all liable to tax as income within the meaning of the Indian Income-tax Act, 1922?

(ii) If the answer to question No. 1 is in the affirmative, whether the said amount is exempt from tax under section 4(3)(vii) of the Act?"

In our opinion, the following questions arise:

             "1. Whether the monthly sum of Rs 10,000 received by H.H. Maharaja Sir Lukhdhirji Bahadur from H.H. Maharaja Mahendrasinhji during the year ended March 31, 1953, is 'income' for the purposes of the Indian Income-tax Act, 1922? and

2. If so, whether the said receipt is of a casual and non-recurring nature and as such exempt from tax under section 4(3)(vii)?"

We refer the above two questions accordingly for the assessment year 1953-54.

12. The departmental representative had no suggestions to make. Mr. Palkhivala on behalf of the assessee wanted the questions as framed by the assessee himself to be referred to the High Court in the place of the question as framed by us. We see no reason to accept this suggestion. Mr. Palkhivala also urges that certain factual statements made by us and inferences drawn by us are inconsistent with the proceedings before the lower authorities. Probably what Mr. Palkhivala wanted was certain amplifications of certain statements made by us. We see no reason to make any further additions but, at his request, we are annexing the following documents, collectively marked "D"

(1) Copy of the assessment order made by the Income-tax Officer on February 12, 1958, for the assessment year 1953-54.

(2) Copy of the consolidated order No. KAP. 154, 571, 572&573, made by the Appellate Assistant Commissioner on May 13, 1959.

(3) Copy of grounds of appeal filed by the department in its appeal, I.T.A. No. 3968 of 1959-60.

(4) Copy of statement showing payments made by H.H. Maharaja Mahendrasinhji to H.H. Maharaja Sir Lukhdhirji Bahadur.

13. H.H. Sir Jiwaji Rao Scindia, Maharaja of Gwalior, one of the administrators with the will annexed of H.H. Sir Lukhdhirji died at Bombay on or about 16th July, 1961, leaving H.H. Vijaykuverba, Maharani of Morvi, and Mr. M.P. Dadachanji as such surviving administrators.

N. A. Palkhivala with B. A. Palkhivala, for the assessee

G. N. Joshi with R. J. Joshi, for the Commissioner

JUDGMENT

The judgment of the court was delivered by

V.S. DESAI J.--The following three questions have been referred to us by the Income-tax Appellate Tribunal in the present reference:

"(1) Whether the sum of Rs 500 can be deducted in arriving at the total income of the 'previous year' ended March 31, 1950, when it was neither paid in that year nor any liability to pay it was incurred in that year though it related to professional services to be rendered at some future date after March 31, 1950?

(2) Whether the monthly sum of Rs 10,000 received by H.H. Maharaja Sir Lukhdhirji Bahadur from H.H. Maharaja Mahendrasinhji during the year ended March 31, 1953, is 'income' for the purposes of the Indian Income-tax Act, 1922? and

(3) If so, whether the said receipt is of a casual and non-recurring nature and as such exempt from tax under section 4(3)(vii)?"

The questions arise out of the order passed by the Tribunal relating to the assessment of the assessee for the assessment years 1950-51 to 1953-54. Although in question No. 1 the dates mentioned are with reference to the first assessment year, viz., 1950-51, the same question arises in the remaining three years also. Question No. 1, therefore, is common to all the assessment years. Questions Nos. 2 and 3 only relate to the assessment year 1953-54. The learned counsel appearing for the assessee has stated before us that the assessee does not want to press question No. 1 and the said question, therefore, need not be answered. We will accordingly not answer question No. 1.

The facts necessary to be stated in connection with questions Nos. 2 and 3 are as follows: The original assessee, H.H. Maharaja Lukhdhirji Bahadur of Morvi, who has since died on the 4th of May, 1957, and is now represented by the surviving administrators of his estate, was the ruler of the erstwhile Indian State of Morvi. On the 21st of January, 1948, he abdicated the gadi in favour of his son, H.H. Maharaja Mahendrasinhji. From 1st of April, 1949, a sum of Rs 10,000 was being paid each month by the son Maharaja to the assessee. This monthly payment, admittedly, continued to be paid from April, 1949, to October, 1953, and from April, 1954, to April, 1957. According to the assessee for the interval between November, 1953, to April, 1954, such payment was not made, but that statement of the assessee was not accepted by the Tribunal. It will thus be seen that a monthly payment of Rs 10,000 continued to be made by the son Maharaja to the father Maharaja from April, 1949, until the father Maharaja died on the 4th of May, 1957. In the assessment year 1953-54 the Income-tax Officer brought to tax the sum of Rs 1,20,000 in respect of the said payment which the assessee had received during that year. In reply to the inquiries, which the Income- tax Officer had made during the said assessment proceedings, the chartered accountants under instructions from the assessee had referred to the said payment as an amount of personal allowance of Rs 10,000 allowed to H.H. Maharaja Lukhdhirji by his son, H.H. Maharaja Mahendrasinhji, and in another letter, which they had sent on the 27th of June, 1957, they had stated that on the abdication of His Highness the Maharaja Lukhdhirji Bahadur on January 21, 1948, His Highness was being paid at Morvi Rs 10,000 per month by way of jiwai. It was contended before the Income- tax Officer that the amount was exempted from tax being in the nature of jiwai or maintenance allowance. This contention, however, was not accepted by the Income-tax Officer, who took the view that the payment was in the nature of an annuity, which was taxable under the Act.

In the appeal before the Appellate Assistant Commissioner, it was contended on behalf of the assessee that the jiwai allowance received by the assessee was an ex gratia payment made to him by his son without there being any legal obligation on him to make the said payment or in the absence of any legal custom binding on him. It was, therefore, not "income" at all, and hence, not taxable. The Appellate Assistant Commissioner held that the payment made by the son Maharaja to the father Maharaja in the present case was not under any contractual or other legally binding obligation, nor could it be said to be in consideration of the father having abdicated the gadi in favour of his son. According to him, therefore, the amount of the payments was not income, which was taxable under the India Income- tax Act. He accordingly accepted the contention of the assessee and modified the order passed by the Income-tax Officer to that extent. Against this part of the Appellate Assistant Commissioner's order, the department appealed to the Appellate Tribunal. Before the Tribunal the argument advanced by the assessee was two-fold. It was contended in the first place that the payment was not "income" under the Indian Income-tax Act, and, secondly, if it was income at all, it was exempt under section 4(3)(vii), being of a casual and non-recurring nature. It was contended, on the other hand, by the department that the monthly payment of Rs 10,000 made by the son Maharaja to the father Maharaja represented a customary payment made by the ruling chief to a relation of his for maintenance and, therefore, constituted "income" under the Indian Income-tax Act, as being income from a definite source. It was further urged that since the payment was being made periodically over a long period of time, it could not be regarded as casual or non-recurring. The Appellate Tribunal accepted the contentions put forward on behalf of the department and allowed the appeal filed by the department. It has then drawn up a statement of the case and referred to this court the two questions relating to this part of its order, which we have already stated.

Mr. Palkhivala, the learned counsel appearing for the assessee, has urged that on the facts found in the present case, the payment made to the assessee by his son Maharaja could not be said to be the assessee's income from any source. It was found by the Appellate Assistant Commissioner that the payment was not made in pursuance of any contractual or other legally binding obligation; it was also not in consideration of the abdication of the gadi by the father Maharaja in favour of his son and the payment, therefore, was a purely ex gratia payment made by the son to his father as by way of allowance. Mr. Palkhivala complains that the Tribunal has erred in taking the view that the payment was made in accordance with the custom and usage and the custom and usage, therefore, provided the source for the said payment and thus constituted it the income of the assessee. According to him, there was no material whatsoever before the Tribunal for the said conclusion, and the three pieces of evidence on which it sought to rely in that connection do not supply any such evidence. Now, the said three pieces of evidence are: the two statements of the chartered accountants in the letters which they had written to the Income-tax Officer in reply to his enquiries to which we have already made reference earlier. In one of them, they referred to the payment as the personal allowance given by the son Maharaja to the father Maharaja and in the other they referred to it as a jiwai allowance. The third piece of evidence was a note appearing in the son Maharaja's return for the assessment year 1948-49, in which in referring to a similar allowance of Rs 10,000 which the father Maharaja before his abdication was paying to his son, the son had stated that he was receiving it as jiwai allowance. Mr. Palkhivala says that the fact that a payment is being made by way of jiwai allowance or a personal allowance does not constitute it a payment made under either a contractual or legal obligation unless the right to such allowance is possessed or acquired by the person to whom the allowance is made under a legal or contractual provision or under a custom or usage having the force of law. There is no evidence whatsoever of any such legal or contractual obligation nor is there any evidence of any such custom or usage. The circumstance that a father was paying a similar allowance to the son by way of allowance will not constitute any evidence of a custom that a son, on succeeding to the gadi on the abdication of the gadi by the father, is required to make such an allowance in favour of his father. Mr. Palkhivala points out that in the history of Morvi the present abdication was the only abdication that had taken place and, therefore, there could be no possibility of any custom or usage being established under which a father Maharaja on an abdication of the gadi will be entitled to receive a jiwai or personal allowance from the son succeeding to the gadi. According to Mr. Palkhivala, therefore, the payment in the present case could not be said to be customary at all in the sense of being made in pursuance of a legally binding custom. It can at the most be customary in the sense of habitual, and a habitual payment, without there being any right in the person to whom the payment is made to enforce the said payment if not made, cannot be anything but an ex gratia or voluntary payment. The payment in the present case, therefore, is a purely voluntary payment. The payment, moreover, is in no way connected with the office, profession or vocation of the person to whom the payment is made. Such a payment, Mr. Palkhivala argues, is a payment, which does not proceed from any definite source and cannot, therefore, qualify to be "income" under the Indian Income-tax Act. Mr. Palkhivala's further argument is that, at any rate, even if it is held to be "income", it would be an income of a casual and non-recurring nature.

Now, there can be no doubt that the payments made by the son Maharaja to the father Maharaja in the present case were voluntary payments in the sense that if the payment were discontinued, there would have been no right in the father Maharaja to have them enforced against the son. Further, there was no contractual or other legal obligation in pursuance of which the payments were made. The Tribunal has, no doubt, taken the view that they could be regarded as having been made in accordance with a custom or usage requiring the ruling chief to make a maintenance allowance to a relation. There is, however, no evidence whatsoever of such a custom or usage, which could be said to have a binding force. The said inference is drawn by the Tribunal because the payment has been referred to as a jiwai allowance by the accountants in their letter under instructions from the Maharaja and because it appeared that the son Maharaja was in receipt of a jiwai allowance from his father, while the father was the ruler. Now, neither of these facts can, in our opinion, be sufficient to warrant a legal inference that there was a custom or usage having the force of law requiring such payments to be made. The mere circumstance that an allowance was paid by the father to his son without anything more would not suffice to draw an inference that the allowance was paid under the obligation of a binding custom or usage. Nor could the circumstance be sufficient to hold in favour of a custom requiring the ruling chief to make a maintenance allowance in favour of any relation of his. It must also be noted that what militates against such an inference is the fact that on the material on the record in the present case, while the abdication took place in January, 1948, the payment of allowance started more than a year later from April, 1949. If the payment was in pursuance of a legally binding obligation, whether arising from contract or from a custom or usage having the force of law, the payment would have started immediately after the abdication and would not have been postponed till a year thereafter. There is no evidence also to connect the said payment with the abdication of the gadi in any way excepting the bare fact that the payment has come to be made some time after the abdication. In these circumstances, it must be held that the payment is wholly voluntary. The only features of the payment, which may have to be considered are that the payments have been made to a person, who had held the gadi; that the payments have been made subsequent to his having relinquished the gadi in favour of his son and that the payments have been made over fairly a long period right up to the death of the payee with almost an unbroken regularity. What has got to be considered is whether the voluntary payments made in such circumstances would constitute the income of the payee.

There is no doubt that under the Indian Income-tax Act even payments, which are voluntarily made may constitute "income" of the person receiving them. It is not necessary that in order that the payments may constitute "income", they must proceed from a legal source: in that if the payments are not made the enforcement of the payments could be sought by the payee in a court of law. It does not, however, mean that every voluntary payment will constitute "income". Thus, voluntary and gratuitous payments, which are connected with the office, profession, vocation or occupation may constitute "income" although if the payments were not made the enforcement thereof cannot be insisted upon. These payments constitute "income" because they are referable to a definite source, which is the office, profession, vocation or occupation. It could, therefore, be said that such a voluntary payment is taxable as having an origin in the office, profession or vocation of the payee, which constitutes a definite source for the income. What is taxed under the Indian Income-tax Act is income from every source (barring the exceptions provided in the Act itself) and even a voluntary payment, which can be regarded as having an origin, which a practical man can regard as a real source of income, will fall in the category of "income", which is taxable under the Act. Where, however, a voluntary payment is made entirely without consideration and is not traceable to any source, which a practical man may regard as a real source of his income, but depends entirely on the whim of the donor, cannot fall in the category of "income". What we have to see, therefore, in the present case, is whether the payment made by the son Maharaja to the father Maharaja, though voluntary, could be regarded as having an origin in what might be called the real source of income. On the facts found in the present case, we cannot say that the payments would be referable to any such source. The department has not been able to show any material on record, from which such a conclusion can be drawn.

Mr. Joshi, learned counsel for the revenue, has argued that the course could be inferred from the fact that the payment was made to a person, who held the position of an ex-Maharaja and it was in pursuance of the position occupied by him that the payment was made. The other fact, which may indicate the source, is that the payment has been made to a person, who has renounced the gadi in favour of the son and has thus accelerated his succession to the gadi. It may, therefore, be said that the payment has been made in consideration of the said circumstance, which constitutes the source of the income.

We are afraid, we cannot accept these submissions of Mr. Joshi, in the absence of any further material placed before us. The position of the exMaharaja would not be regarded as an office held by him for which the payment has been made. As we have already pointed out, the payment had started a considerable time after the abdication, i.e., a considerable time after the said position came to be occupied by the son Maharaja. Again, there being no evidence of any connection between the abdication of the gadi and the subsequent payment made to the father Maharaja, it is not possible to say that the said circumstance also affords any foundation for the source of income. It may be that these circumstances may have been either partly or wholly responsible for the desire to arise in the mind of the son Maharaja to make an allowance for his father, but even assuming that it served as a motive for the payment, it would not suffice to make the payment anything but a purely voluntary payment depending upon the whim of the donor. Mr. Joshi has also pointed out that the reference to the allowance as jiwai itself connotes an allowance for maintenance and it is the obligation of the ruling chief to maintain his relations. The said obligation, therefore, provides the source of the income.

Mr. Palkhivala has pointed out that although the allowance has been referred to as jiwai, it could not be regarded as an allowance for maintenance in the sense of money required for the maintenance of the father, because the father was possessed of a large fortune himself and his yearly income, which was assessable to tax, even apart from this payment, was in the neighbourhood of Rs 5 lakhs. The allowance, therefore, could not be said to have been proceeding from the obligation of a ruling chief to maintain his relations or dependants.

In our opinion, therefore, the payments made by the son Maharaja to the father Maharaja in the present case could not be said to be payments, which constituted income under the Indian Income-tax Act.

The view that we are taking is supported by the decision of the Full Bench of the Allahabad High Court in Rani Amrit Kunwar v. Commissioner of Income-tax [1946] 14 I.T.R. 561. In that case the question arose whether the annual wardrobe allowance, which the assessee was receiving from her brother, the Maharaja of Nabha State, out of the State budget, constituted her income under the Indian Income-tax Act. There was no contractual or other legal obligation under which the payments were made and there was also no evidence in the case to show that the payments were attributable to any custom, usage or traditional obligation. It was held on these facts that there was no origin for the payments, which could amount in its nature to a definite source so as to render each payment "income" and not merely a casual or annual income and hence the payments were not income and were not assessable to income-tax. In our opinion there is hardly any distinction between the said case and the case before us. In that case also the payments were made by a Maharaja to a person, who stood in the relationship of a sister to him. The payments were made regularly every year as wardrobe allowance on two festive occasions. It was held that in the absence of any further evidence which would show some more sanction to those payments, they were merely the result of the bounty of the ruler and, therefore, could not be said to have their origin in a definite source, which the assessee could regard as a real source of income. In our opinion, therefore, the payments of Rs 1,20,000, with which we are concerned in the present case, could not be said to be the income of the assessee.

In the view that we are taking the next question, viz., whether, if it was income, it was exempt from tax under section 4(3)(vii) as being of a casual and non-recurring nature, does not fall to be considered.

Mr. Palkhivala has urged that it would be so exempt under section 4(3)(vii). He has argued that the payment is of a casual nature because it depends upon the sweet will of the donor and if not paid to him, could not be enforced against him. He has further argued that the payment is also non-recurring in the right sense of the term and the mere circumstance that it has been paid at regular intervals does not make it cease to be a nonrecurring payment. According to him, a non-recurring payment is one for the recurrence of which the payee has no right to expect. In the present case the payee could have had no right to expect the recurrence because there was no obligation whatsoever on the part of the payer to make the same. The payee would get it if it was paid and may perhaps hope for it, but he would have no right to expect that the payment will necessarily be made or that he will necessarily get it.

Mr. Joshi, on the other hand, has argued that when it is said that a payment is voluntary, there could possibly be no right in the payee either to get it or even to expect it. Since even a voluntary payment can be one, which is not casual or non-recurring, the test for determining whether a payment is non-recurring or not in the case of a voluntary payment, cannot be said to be whether the payee has a right to expect it or not, because if the payee has a right to expect it, it would cease to be a voluntary payment.

We do not propose to go into a detailed discussion of the submissions urged before us, though prima facie we are inclined to agree with the view put forward by Mr. Palkhivala, because it is not necessary to answer the said question in view of our answer to the earlier question.

In the result, therefore, question No. 1 is not answered because it is not pressed. Our answer to question No. 2 is in the negative and in view of our answer to question No. 2, question No. 3 need not be answered. Assessee will be entitled to get three-fourths of the costs from the department.

No order on the notice of motion.

Question No. 2 answered in the negative.