HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Raja Rameswara Rao v. Commissioner of Income-tax, Hyderabad
Civil Appeal No. 420 of 1962
[1964] 2 SCR 847 ·
Indian Income-tax Act, 1922 · Hyderabad (Abolition of Jagirs) Regulation, 1358F: section 14 · Hyderabad Jagirs (Commutation) Regulation, 1359F: sections 3, 6, 7
Holding and result. Interim maintenance paid for periods before 1 April 1950 was income, distinct from the capital commutation sum; later payments required factual classification, and the jagirdar’s appeal was dismissed with costs.
Sources & disclosures includedDownload original judgment / order
Four-judge bench; judgment delivered by A. K. Sarkar, J. · S. K. Das, J. · A. K. Sarkar, J. · K. N. Wanchoo, J. · K. C. Das Gupta, J.
01 · Facts of the case
After abolition of the Wanaparthy jagir, the former proprietor received four payments totalling Rs.1,47,857-4-0 described as interim maintenance. The first preceded 1 April 1950 and three followed it. The taxpayer argued that all represented capital compensation for extinction of jagir rights.
02 · Discussion by the Hon’ble Court
The Regulations distinguished interim maintenance from the final commutation sum. The statutory description and method of payment made pre-commutation maintenance income in character, while final commutation was capital. Payments after 1 April 1950 needed inquiry because they might have been made toward the commutation amount.
Source: Primary judgment: reasoning
03 · Judicial decision
Interim maintenance that did not form part of the commutation amount was taxable income; payments toward the commutation sum were capital and not taxable as income.
Source: Primary judgment: holdings
04 · Outcome / in whose favour
Appeal dismissed with costs. The Tribunal’s inquiry into the character of the three post-1 April 1950 payments remained appropriate.
05 · AKHB REVIEW POINT
AKHB analysis: abolition or acquisition payments require component-by-component classification. Separate interim income replacement from final capital commutation and prove the period and statutory account to which each payment belongs.
Source & verification
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