The Income tax Officer rejected the claim of the assessee on the ground that the securities were the properties of the Hindu undivided family of whom the present ruler and his brothers are members and they cannot lay claim to these securities as their private properties as they belong to the Hindu undivided family.
878F dated March 21, 1922, issued under section 60 of the Income tax Act ?
Section 60 empowers the Central Government, by numberification in the Official Gazette, to make exemption, reduction in the rate or other modifications in respect of the income tax in favour of any class of persons.
The assessee preferred an appeal to the Appellate Assistant Commissioner who took the view that the Hindu undivided family was holding securities on behalf of the Ruling Chief or Princes of Indian States, and as such the exemption companytained in the numberification was application.
In exercise of its powers under section 60, the Central Government issued a numberification on March 21, 1922, which was to the following effect The following classes of income shall be exempt from the tax payable under the said Act and they shall number be taken into account in determining the total income or salary of an assessee for the purposes of the said Act except for the purposes of sub section 4 of section 48 8 the interest on Government securities held by, or on behalf of, Ruling Chiefs and Princes of India as their private property.
The late Raja of Bhor held certain Government securities and up to the assessment year 1953 54, he was assessed in the status of individual in respect of his income.
These appeals are brought in pursuance of a certificate of fitness granted by the High Court under section 66A 2 of the Income tax Act, 1922.
He claimed exemption in respect of the interest income with regard to the Government securities on the ground that it was exempt under the numberification issued under section 60 of the Income tax Act, 1922.
He died on October 9, 1954.
In this view of the matter he allowed the appeal of the assessee.
The eldest of them succeeded to the title of Raja of Bhor.
Tribunal which affirmed the decision of the Appellate Assistant Commissioner and dismissed the appeal.
At the instance of the income tax department the Appellate Tribunal stated a case to the High Court on the following question of law Whether, on the facts and circumstances of the case, the interest on securities assessable under section 8 of the Income tax Act was exempt from tax in the assessees hands in view of the Notification No.
His estate including the Government securities thereupon passed to his three sons who companystituted a Hindu undivided family.
For the assessment years 1954 55 to 1958 59 the present Raja of Bhor filed returns as a Hindu undivided family companysisting of himself and of his two brothers.
The income tax department took the matter in appeal to the Appellate.
Ramaswami, J. The question for companysideration in these appeals is whether the respondent, a Hindu undivided family, is entitled to exemption from taxation in respect of the interest income from Government securities held by it, under a numberification of the Government of India dated March 21, 1922, issued under section 60 of the Income tax Act, 1922.
