HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Shri Chatrasinghji Kesari Singhji Thakore v. Commissioner of Income-tax, Bombay
Civil Appeals Nos. 148 and 149 of 1964
[1966] 2 SCR 440 ·
Indian Income-tax Act, 1922: sections 2(6C), 3(vii) and 66 · Bombay Land Revenue Code, 1879: sections 3(13), 3(14) and 45 · Bombay Local Boards Act, 1923: sections 93 and 96 · Bombay Taluqdari Tenure Abolition Act, 1949
Sources & disclosures includedDownload original judgment / order
3-judge bench · K. Subba Rao, J. · J. C. Shah, J. · S. M. Sikri, J.
Assessment years: 1952-53, 1953-54
01 · Facts of the case
The assessee leased manganese mines at Shivrajpur and Bhat to Shivrajpur Syndicate Ltd. Besides rent and royalty, the lease required the Syndicate to discharge public demands relating to the mines, except land revenue. The Syndicate paid the assessee Rs.16,309 and Rs.39,515 for the two relevant years as 'Local Fund Cess', calculating three annas per rupee of rent and royalty. The applicable levy was instead measured by land revenue; the Tribunal found only Rs.270.45 payable as cess. The Income-tax Officer taxed the receipts for AYs 1952-53 and 1953-54. Although the first appellate authority excluded them, the Tribunal and Bombay High Court held the excess taxable.
Source: Lease, receipts, assessment history and statutory cess measure: SCR pp.441-445 / PDF pp.2-6
02 · Discussion by the Hon’ble Court
The Court held that payments contractually linked to rent and royalty had a closely similar quality and were income unless specially exempted. The Syndicate paid the amounts to discharge what it believed was its lease obligation; the assessee received and appropriated them as his own. He was the landholder liable for land revenue and local-fund cess, not a government collection agent, and the Syndicate was not shown to be an inferior holder liable for the levy. The assessing authority could determine the actual cess quantum for assessment purposes even if that determination did not bind another body or the Syndicate. Executive revenue-accounting instructions could not alter the statutory measure. A pending civil refund claim did not remove the receipts' income character in the year received, and mistaken overpayment did not make them casual or non-recurring.
Source: Income character of contract-linked excess and absence of government agency: SCR pp.445-446 / PDF pp.6-7; Executive instructions, refund suit and casual-receipt arguments: SCR pp.447-448 / PDF pp.8-9
03 · Judicial decision
The Court held the excess of the contractual receipts over the assessee's actual cess-reimbursement entitlement to be taxable income. Neither a possible refund claim by the Syndicate nor an assumed mistake in payment altered that character, and the receipts were not casual and non-recurring. Both appeals were dismissed with costs, with one hearing fee.
Source: Final rejection of casual-receipt argument and dismissal: SCR p.448 / PDF p.9
04 · Outcome / in whose favour
In favour of the Revenue. The assessee's appeals failed and the excess amounts remained assessable as income for the two years; the Court did not adjudicate the merits of the Syndicate's separate civil refund claim.
Source: Refund claim left open and appeals dismissed: SCR pp.447-448 / PDF pp.8-9
05 · AKHB REVIEW POINT
AKHB analysis: when a payer labels a contractual reimbursement as a statutory levy, test the governing statute and contract separately: identify the person legally liable, the correct levy base, whether the recipient acts as a collection agent, and what happened to any excess. A repayment dispute does not by itself reverse the tax character of an amount already received and appropriated. For current advice, separately verify the present receipt rules, any overriding-obligation or refund principles, the current levy legislation and later case law.
Source: AKHB analysis based on the statutory-liability, agency and receipt-character reasoning
Source & verification
Download original judgment / order · Open cited source rendition
Full 9-page SCR report read. The editorial headnote on PDF pp.1-2 was distinguished from Shah J.'s unnumbered judgment beginning on PDF p.2; the lease terms, statutory extracts, receipt analysis and operative dismissal through PDF p.9 were reviewed.
- Exact source bytes, SHA-256 and 9-page count match catalogue asset 1966_2_440_448; every PDF page was read and visually checked.
- The judicial text verifies Civil Appeals Nos. 148 and 149 of 1964, decision on 28 October 1965, the three-member bench and AYs 1952-53 and 1953-54.
- No record with the Chatrasinghji/Thakore party identity, the [1966] 2 SCR 440 citation or this decision was found in content/supreme-court-cases.json or the archived reviewed releases.
Statutory scope
This decision construes the repealed Indian Income-tax Act, 1922 and historical Bombay land-revenue, local-board and taluqdari legislation. It does not establish the treatment of analogous receipts under the current Income-tax Act, 1961 or current State levy law.
Later treatment
Source checked 2026-10-10. Later treatment of the receipt-characterisation analysis and any present-law analogue has not been comprehensively checked; no citator or current-law clearance is represented.
Page references identify the supplied PDF; paragraph references identify the judgment unless stated otherwise.
Coverage, AI disclosure & professional disclaimer
Selected Supreme Court income-tax decisions and procedural orders checked against their identified sources. This collection is not exhaustive. The research catalogue has 2,569 indexed PDF assets, including alternate copies and incidental matches; that is not a count of unique or reviewed judgments. Historical and unreported coverage remains open.
AI-assisted research checked against the identified source. Extraction, interpretation or omission errors remain possible. Source review does not mean independent approval by a practising professional. Verify every material statement against the complete original judgment.
General research information only; not legal or tax advice, a certified judgment or a substitute for the full order. Applicability depends on facts, assessment year, statutory version and jurisdiction. Subsequent treatment is unverified unless a note expressly identifies the sources checked. Downloading does not create a professional engagement. Obtain case-specific advice before reliance.
The official 1961–2025 structural correspondence does not establish that a precedent applies under the new Act. Verify the enacted wording, commencement and transitional provisions separately.