# 639' JODHA MAL KUTHIALA v. COMMISSIONER OF INCOME TAX, PUNJAB, JAMMU & KASHMIR, HIMACHAL PRADESH AND PATIALA

- **Citation:** [1972] 1 S.C.R. 639
- **Court:** Supreme Court of India
- **Decided:** 1971-09-09
- **Case number:** Civil Appeals Nos. 1970 to 1973 of 1968
- **Bench:** K. S. Hegde, A. N. Grover
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/639-jodha-mal-kuthiala-v-commissioner-of-income-tax-punjab-jammu-kashmir-5421
- **Pages:** 12

## Headnote

Income-tax Act, s. 9(1)-Property left by evacuee in Pakistan-Administered by Custodian under provisions of Pakistan (Administration of
Evacuee Property) Ordinance 15 of 1949--£vacuee whether
continues
'owner' of property for purpose of .s. 9 of the Income-tax Act, 1922.
The assessee was a registered firm deriving income from securities,
property, business and other sources.
In 1946 it purchased a hotel in
Lahore for a sum of Rs. 46 la.as.
For that purpose it raised a loan of
Rs. 30 lacs from a bank and a loan of Rs. 18 lacs from one R. The
loan taken from the bank was largely repaid but with R the assessee came
to an agreement whereby R accepted a half share in the said property in
lieu of the loan advanced and also I/3rd of the outstanding liability of
the bank.
This
arrangement came into effect on November 1, 1951.
After the creation of Pakistan, Lahore became a part of Pakistan and
the hotel in question was declared evacuee property.
As such it came to
vest in the Custodian in i Pakistan.
In its returns for the assessment years
1952-53, 1955-56 and 195&-57 the assessee claimed certain amounts as
losses on account of interest payable to the bank but showed the gross
annual letting value from the said property at Nil. The Incomectax Officer
held that since the property had vested in the Custodian no income or
loss from that property could be considered in the assessee's case.
The
Appellate Assistant Commissioner confirmed the order of the Income-tax
Officer. The Appellate Tribunal however came to the conclusion that
the assessee still continued to be the owner of the property for the purpose of the computation of loss, and the interest paid was a deductible
allowance under s. 9(1) (iv) of the Income-tax Act, 1922.
In reference
the High Court on an analysis of the various provisions of the Pakistan
(Administration of Evacuee Property) Ordinance 15 of 1949 came to the
conclusion that for the purpose df s. 9 of the Act the assessee could not
be considered as the owner of that property. In the assessee's appeal to·
this Court it was contended that the property vested in the Custodian only
for the purpose of administration and the assessee still continued to be·
its owner.
HELD.: Under the Pakistan (Administration of Evacuee
Property)
Ordinance 1949 the evacuee could not take possession of his property. He
could not lease that property. He could not sell the property without
~e consent of the custodian.
He could not mortgage that property. He
could not realise the income of the property. All the. rights that the
evaC'Uee had in the property were exercisable by the Custodian excepting
that he could not appropriate the proceeds to his own use.
The evacuee
had only a beneficial interest in the property. In the eye of the law the
Custodiau who hacl all the powers of the owner was the owner of the
property,
His position was no less than that a Trustee. (643 F-644 A]
Section 9 of the Income-tax Act, 1922, brings to tax the income from
property and not the interest di a person in the property. A property ,
cannot be owned by. two persons, each one having independent and ex·
elusive right over it. Hence for the purpose of s. 9 the owner must be·
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SUPREME COURT REPORTS
[1972] 1 S.C.R
that person who can exercise the rights of the owner, not on behalf of the
owner but in his own ri~t. Accordingly the assessee was not the owner
of the property in question during the relevant assessment yeaTs for the
purpose of s. 9 of the Act.. [644 DJ
It is true that equitable considerations are irrelevant in interpreting tax
laws. But those laws like al! other laws have to be interpreted reasonably
and in consonance with justice.
If the
thousands of evacuee who left
practically all their properties as well as businesses in Pakistan had been
considered as the owners of those properties and businesses as long
as
the 'ordinance' was in force then those unfortunate
persons would have
had to pay income-tax on the basis· of the annual letting value of their

## Text

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639'
JODHA MAL KUTHIALA
v.
COMMISSIONER OF INCOME TAX, PUNJAB, JAMMU &
KASHMIR, HIMACHAL PRADESH AND PATIALA
September 9, 1971
[K. S. HEGDE AND A. N. GROVER, JJ.J
Income-tax Act, s. 9(1)-Property left by evacuee in Pakistan-Administered by Custodian under provisions of Pakistan (Administration of
Evacuee Property) Ordinance 15 of 1949--£vacuee whether
continues
'owner' of property for purpose of .s. 9 of the Income-tax Act, 1922.
The assessee was a registered firm deriving income from securities,
property, business and other sources.
In 1946 it purchased a hotel in
Lahore for a sum of Rs. 46 la.as.
For that purpose it raised a loan of
Rs. 30 lacs from a bank and a loan of Rs. 18 lacs from one R. The
loan taken from the bank was largely repaid but with R the assessee came
to an agreement whereby R accepted a half share in the said property in
lieu of the loan advanced and also I/3rd of the outstanding liability of
the bank.
This
arrangement came into effect on November 1, 1951.
After the creation of Pakistan, Lahore became a part of Pakistan and
the hotel in question was declared evacuee property.
As such it came to
vest in the Custodian in i Pakistan.
In its returns for the assessment years
1952-53, 1955-56 and 195&-57 the assessee claimed certain amounts as
losses on account of interest payable to the bank but showed the gross
annual letting value from the said property at Nil. The Incomectax Officer
held that since the property had vested in the Custodian no income or
loss from that property could be considered in the assessee's case.
The
Appellate Assistant Commissioner confirmed the order of the Income-tax
Officer. The Appellate Tribunal however came to the conclusion that
the assessee still continued to be the owner of the property for the purpose of the computation of loss, and the interest paid was a deductible
allowance under s. 9(1) (iv) of the Income-tax Act, 1922.
In reference
the High Court on an analysis of the various provisions of the Pakistan
(Administration of Evacuee Property) Ordinance 15 of 1949 came to the
conclusion that for the purpose df s. 9 of the Act the assessee could not
be considered as the owner of that property. In the assessee's appeal to·
this Court it was contended that the property vested in the Custodian only
for the purpose of administration and the assessee still continued to be·
its owner.
HELD.: Under the Pakistan (Administration of Evacuee
Property)
Ordinance 1949 the evacuee could not take possession of his property. He
could not lease that property. He could not sell the property without
~e consent of the custodian.
He could not mortgage that property. He
could not realise the income of the property. All the. rights that the
evaC'Uee had in the property were exercisable by the Custodian excepting
that he could not appropriate the proceeds to his own use.
The evacuee
had only a beneficial interest in the property. In the eye of the law the
Custodiau who hacl all the powers of the owner was the owner of the
property,
His position was no less than that a Trustee. (643 F-644 A]
Section 9 of the Income-tax Act, 1922, brings to tax the income from
property and not the interest di a person in the property. A property ,
cannot be owned by. two persons, each one having independent and ex·
elusive right over it. Hence for the purpose of s. 9 the owner must be·
640
SUPREME COURT REPORTS
[1972] 1 S.C.R
that person who can exercise the rights of the owner, not on behalf of the
owner but in his own ri~t. Accordingly the assessee was not the owner
of the property in question during the relevant assessment yeaTs for the
purpose of s. 9 of the Act.. [644 DJ
It is true that equitable considerations are irrelevant in interpreting tax
laws. But those laws like al! other laws have to be interpreted reasonably
and in consonance with justice.
If the
thousands of evacuee who left
practically all their properties as well as businesses in Pakistan had been
considered as the owners of those properties and businesses as long
as
the 'ordinance' was in force then those unfortunate
persons would have
had to pay income-tax on the basis· of the annual letting value of their
properties and on the income,
gains and properties of the business left
by them m Pakistan though they did not get a paisa out of those properties and business.
Fortunately no one in the past interpreted the law
in the manner suggested by the assessee. [644 E-Gl
Official Assignee for Bengal (Estate of Jnanendra Nath Pramanik), 5
I.T.R. 233, Commissioner of Inland Revenue v. Fleming, 14 T.C. 78 and
Sir Currimbhoy Ibrahim Baronetcy Trust v. C.l.T., Bombay, 2 I.T.R. 148,
applied.
Amar Singh v. Custodian, Evacuee Property, Puniab,
[19571 S.C.R.
801, distinguished.
P. C, Lal Choudhary v. C.I.T., 16 I.T.R. 123 and Nawab Bahadur of
Murshidabad v. C.I.T., West Bengal, 28 I.T.R. 510, considered.
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1970
to 1973 of 1968.
Appeals from the judgment and order dated September 20,
1967 of the Delhi High Court in Income-tax Reference Nos. 2
and 3 of· 1967.
V. C. Mahajan and H. K. Puri, for the appellant (in all the
appeals).
V. S. Des1111i R. N. Sachthey and B. D. Sharma,.for the respondent (in alt the appeals) .
The Judgment of the Court was delivered by
Hegde, J,
In these appeals by certificate, the only question
arising for decision is : "whether on the facts and in the circumstances of the case, the assessee continued to be the owner of the
property for the purposes of computatlion of income under s. 9
of the Income-tax Act, 1922" (to be hereinafter referred to as the
Act).
A Full Bench of the Delhi High Court speaking through
S. K. Kapur, J. answered that question in the negative.
Being
dissatisfied with that decision the assessee has brought these
appeals.
Now turning to the facts of the case, the concerned assessment years are 1952-53, 1955-56 and 1956-57,
the relevant
accounting periods being financial years ending March 31, 1952,
March 31, 1955 and March 31, 1956. The assessee is a registered
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JODHA MAL v. C.I.T. (Hegde, J.)
641
firm deriving income from inte!"'st on securties, property, business and other &ources. Sometime ln the year 1946 it purchased
the Nedous Hotel in Lahore for a sum of Rs. 46 lakhs. For that
purpose it raised a loan of Rs. 30 lakhs from M/s. Bh<.lfat Bank
Ltd., Lahore and a loan of Rs. 18 lakhs from the Raja of Jubbal.
The loan taken from the bank was partly repaid but as regards
the loan taken from the Raja, the assessee came to an agreement
with the Raja under which the Raja accepted a half share in the
said property in lieu of the loan advanced and also 1/3rd of the
outstanding liability of the bank.
This arrangement came into
effect on November 1, 1951.
After the creation of Pakistan,
declared an evacuee property and consequently vested
in
the
Custodian in the Pakistan.
In its return for the relevant ass_essment years, the assessee
claimed
losses
of
Rs.
1,00,723/-
Rs.
1,16,599/-
and
Rs. 1,16,599/- respectively but showed the gross a.nnual letting
value from the said property_ at Nil. The loss claimed was stated
to be on account of interest payable to the bank. Since the property in question has vested in $e Custodian of Evacuee Property, in Pakistan, the Income-tax Officer held that no income or
loss from that property can be considered in the assessee's case.
He accordingly disallowed the assessee's claim in respect of the
interest paid to the bank. The Appellate Assistant Commissioner
confirmed the ord~r of the Income-tax Officer. In second appeal
the Tribunal came to the conclusion that the. assessee still continued to be the owner -of the property for the purpose of computation of]oss. The Tribunal held that the interest paid is a
deductable allowance under s. 9(1)(iv) of the Act.
In arriving
at that conclusion, the Tribunal relied on its earlier decision in
the case of the asst)ssee. in respect of the assessment year 1951-52.
Thereafter at the instance of the assessee, the Tribunal submitted
the question &el out earlier.
The High Court on an analysis of
the v;μ'ious provisions of the Pakistan (Administration of Evacuee
Property) Ordinance, 1949 (XV of 1949) (to be hereinafter
referred to as the 'Ordinance') came to the conclusion that for the
purpose of s. 9 of the Act, the assessee cannot be considered as
the owner of that property.
It was urged by Mr. V. C. Mahajan, learned Counsel for the
assessee that the High Court erred in opining ~hat the assessee
was not the owner of the property, for the purpose of s. 9 of the
Act. According to him t_he property vested in the Custodian only
for the purpose of administration and the assessee still continued
to be its owner. He contended th_at the expression "owner" means
the person having the ultimate right to the property. He further
contended that the so Jong as the assessee had a right to that
7-L3Sup.C.I./72
642
SUPREME COURT REPORTS
(1972) I S.C.R.
property in whatever manner that right might have been hedged
in or restricted, he still continued to be the owner. On the other
hand, it was contended on behalf of the Revenue that the Incometax is concerned with income, gains and profits.
Therefore for
1he purpose of that Act, the o\\11ler is that person who is entitled
to the income.
According to the Revenue the word "owner" in
s. 9 refers to the legal ownership and not to any beneficial interest
in the property.
For deciding the question whether the assessee was the owner
of the property for the purpose of s. 9 of the Act during the relevant accounting years, we have to look to the provisions of the
Ordinance. Let us first take a survey of the relevant provisions of
l11e Ordinance and thereafter analyse the effect of those provisions.
The long title of the Ordinance says that it is an Ordinance
to provide for the administration of the evacuee
property
in
P:1kistan and for certain matters incidental thereto.
The preamble says that "w~ereas an emergency has arisen which renders
it necessary to provide for the administration of evacuee property
in Pakistan and for certain matters incidental thereto".
Section
6(1) provides tha.t all evacuee property shall vest and shall be
Jecmcd always to have vested in the Custbdian with effect from
the !st day of March 1947. Section 9 gives power to the Custodian to take possession of the evacuee property.
Sectiort 11
provides that any amount due to an evacuee or payable in respeet
of any evacuee property, shall be paid 'to the Custodian by the
person liable to pay the same and the payment to the Custodian
discharges the debtor's liability to the extent of the payment made.
Section 12 prescribes that the property which has vested in or of
which possession has been taken by the
Custodian shall
be
exempt from all legal process, including seizure, distress, ejectment or sale by any officer of a Court or any other authority and
no injunction or qther order of whatever kind in respect of such
property shall be grantled or made by any Court or any other
authority.
Section 14(1)_ permits the Rehabilitation Authority to
allot evacuee property to the refugees.
Section 16(1) says that
no creation or transfer of any right or interest in or encumbrance
upon any property made in any manner whatsoever on or after
the first day of March, 194 7 by or on behalf of an evacuee or
by or on behalf of a person who has or may become an evacuee
after the date of such creation or transfer, shall be effective ~o
as to confer any right or remedy on any party thereto or on any
person claiming under any such party, unless it is confirmed by
the Custodian.
Section 19 empowers the Custodian to restore
the evacuee property to the lawful owner subject to such condit. ions as he may be pleased to impose,
Section 20(1) stipulates
th'at the Custodiati may take such rnedsl.res as
he
considers
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necessary or expedient for the purpose of administering, preserving and managing any evacuee property which has vested in him
and may for any such purpose as aforesaid, do all acts and incur
all expenses necessary or incidental thereto.
Sub-s. (2) of that
section provides that "without prejudice to the generality of the
provisions contained ir. · ub-s. ( 1), the Custodian may.
(m) sell any evacuee property, notwithstanding anythis contained in any law or agreement to the contrary
relating thereto,
Provided that the Custodian shall not under this
Clause or the next succeeding clause sell any immovable evacuee property or any business or undertaking
which is evacuee property, except with the
previou>
approval of the Central Government."
Clause (i) of that sub-section empowers the
CL1stodian
t••
demolish or dismantle any evacuee property which in his opinion
cannot be repaired, or sell the site of such property and the
materials thereof.
The Custodian can. recoup all the expensb
incurred by him in the administration of the evacuee property
from out of the receipts in his hand in respect of that property,
Section 22(1) requires the Custodian to maintain separate account
of the property of each evacuee of which he has taken possession
and shall cause to be nrnde therein entries of all receipts and
expenditure in respect therof.
The Ordinance starts by saying that it is an Ordinance to
provide for the administration of evacuee
property
and
not
management of evacuee property.
The expression "administration" in relation to an estate, in law means management and
settling of that estate. It is a power to deal with the estate. The
evacuee could not take possession of his propertiy.
He could
not lease that property.
He could not sell that property without
the consent of the Cus!._odian.
He could not mortgage that property. He could not realise the income of the property. On the
other hand. the Custodian could take possession or that property.
He could realise its income. He could alienate the property and
he could under certain circumstances demolish the property. All
the rights that the evacuee had in the property he left in Paki,tan
were exercisable by the Custodian excepting that he could not
appropriate the proceeds for his own use.
The evacuee could
not exercise any ri)!hts in that property excevt with the c0~· cnt
of the Custodian. He merely had some beneficial interest in that
property.
No doubt that residual interest in a sense is owne.rship.
The property having vested in the Custodian, who had
644
SUPREME COURT REPORTS
[I 972] I S.C.R.
all the powers of the owner, he was the legijl owner of the. propertv'. In the eye of the law, the Custodian was the owner of that
property.
The position of the Custodian was no less than that
of a Trustee. Section 9(1) says :
'The tax shall be payable by an assessee under the
head "Income from Property" in respect of the bona fide
annual value of property consisting of any buildings
or lands appurtenant thereto of which he is the owner,
other than such portions of such property as he may
occupy for the purposes of any business, profession or
vocation carried on by him the profits of which are
assessable to tax subject to the following
allowances
namely:-
The question is who is the "owner" referred to in this section?
Is it the person in whom the property vests or is it he who is
entitled to some beneficial interest in the property
It must be
remembered that s. 9 brings to tax the income from property and
not the interest of a person in the properly. A property cannm
be owned by two persons, each one having independent and exclusive right over it.
Hence for the purpose of s. 9, the owner
must be that person who can exercise (he rights of the owner,
not on behalf of the owner but in his own right.
For a minute, !er us look at things from the practical point
of view. If the thousands of evacuees who left practically all
their properties as well as business in Pakistan had been
considered as the owners of those properties and business as long
as the 'Ordinance' was in force . then those unfortunate persons
would have had to pay income-tax on the basis of the annual
letting value of their properties and on the income, gains and
profits of the businesses left by them in Pakistan though they did
not get a paisa out of those properties and businesses. Fortunately
no one in the past interpreted the law in the manner Mr. Mahajan
wants us to interpret. It is t!rue that equitable considerations are
irrelevant in interpreting tax laws.
But these laws, like all other
laws have to be interpreted reasonably and in consonance with
justice.
Tlie question as to who is $e owner of a house property under
s. 9 of the Act in circumstances similar to those before us came
up for consideration before the Calcutta High Court in the matter
of The Official Assignee for Bengal (Estate of Jnanendra Nath
Pramanik)('). Jn that case on the adjudication of a person as
insolvent under the Presidency Towns Insolvency Act,
1909,
cert~in house property of the insolvent vested
in the Official
Assignee.
The question arose whether the
Official
Assignee
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JODHA MAL v. c.I.T. (Hegde, J.)
645
could be taxed in respect of the income of the property under s. 9.
The High Court hel<! tJiat the property did not by reason of the
adjudication of the debtor cease to be a subject fit for taxation
and in view of the provisions of s. 17 of the Presidency Towns
Insolvency Act, the Official Assignee was the "owner" of the
property and he could rightly be assessed in respect of the income
from that property under s. 9.
Section 17 of the Preside<1cy
Towns lnsolvency Act, reads:
"On the making of an order of adjudication, the
μrop~rty of the insolvent whereyer situate shall vest in
the official assignee and shall become divisible among
his creditors. and thereafter, except as directed by this
Act, no creditor to whom the insolvent is indebted in
respect of any debt provable in insolvency shall, during
the pendency of the insolvency proceedings, have any
remedy against the property of the insolvent in respect
of the debt: or shall commence any suit or other legal
proceedings except with the leave of the Court and on
such terms as the Court may impose :
Provided that this section shall not affect the power
of any secured creditor to realize or otherwise deal
with his security in the same manner, as he would have
been entitled to realise or deal with it if this section
had not been passed."
We may note that the powers of the Custodian are no less
than that of . the Official Assignee under the Presidency Towns
Insolvency Act, 1909.
Delivering the judgment of the Court in
the Official Assignee's case('), Costello, J. observed :
"With regard to the first point, Mr. Page argued
that although by section 17 of the Presidency Towns
Insolvency Act these. prop.erties vested in the Official
Assignee he did not thereby or thereupon become the
owner of those properties within the meaning properly
ascribable to that word for the purposes of the applicability of Section 9.
What Mr. Page really invited us
to do was to restrict the meaning of the word by putting
before it the qualifying adjective "beneficial".
What
was argued by Mr. Page was that the Official Assignee
had no legal interest in the properties themselves, they
were merely vested in him for the purposes of the
administration of them in the interest of the creditors
of the insolvent.
I am unable to accept Mr.
Page's
contention.
In this count1y there is
no
difference
between "legal estate" and "equitable estate''.
In this
connection the case of Sir Currimbhoy Ebrahim Baro-
' l) S l.T.R. 233.
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SUPREME COURT REPORTS
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11etcy Trust v.
Commissioner of Income-tax, Bombay
61, I.A. 209) is of assistance. At page 217 Sir Sydney
Rowlatt when giving the judgment of the Privy Council
made this observation : "In their Lordships" opinion
the effect of the Act creating these trusts is not to give
the baronet for the time being any right to any part of·
the interest or property specifically or any right which,
even granting that the legal title is not the only thing
that can ever be looked at, would make it true to say
that any proportion of the interest is not 'receivable'
or any proportion of the property is not 'owned' by the
incorporated trustees."
The learned judges of the Calcutta High Court in· reaching
that conclnsion relied on the decision in The Commissioner of
Inland Revenue v. Fleming('). That appeal related to a claim for
repayment of income-tax to which the respondent claimed to be
entitled in respect of "personal allowance" introduced into the
Income-tax system by s. 18 of the Finance Act, 1920. The claim
arose in the following circumstances :
The respondent was declared insolvent in 1921.
He was
then the owner of heritable properties.
His insolvency lasted
till May 10, 1926. When he received his discharge on payment
of composition and was reinvested in his estate. At that time his
estate consisted of ( 1) Two of the original heritable properties
which had not been realised by the trustee in the insolvency and
(2) a balance in cash of £ 53 odd.
During the insolvency,
the trustee paid income-tax on the full annual value of the two
properties in question.
The contention of the respondent was
that the radical right to these properties was in him all that time;
and that; in paying the tax, the trustee was really paying it on
his behalf-that is, on his income-and that consequently there
arose in each of the years in which the payment was made a right
to deduct his "personal allowance" from the annual value of the
properties.
The right to this abatement is said to have passed
to the Respondent himself in virtue of the reinvestment in his
estate which occurred upon his discharge on composition.
Rejecting this contention Lord President observed :
"It is obvions that, unless dnring
the years
in
question the annual value of the properties was income
of the Respondent, he cannot have any claim to abatement of it for income-tax purposes; and accordingly
e'\'erytbing depends upon the soundness of the proposition that the income consisting in the annual value of
l l) 14, Tax Cases 78.
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JODHA MAL V. C.I.T. (Hegde, J.)
647
these properties was truly income of the Respondent.
I do not see how it can possibly be so described. It
was part of the income arising from the sequestrated
estates vested in the trustee for the Respondent's creditors. Any income that did arise from those estates was
income of the trustee as such, and he (and he alone)
had the right to put it into his pocket as income. It
was not income that went or could go into the pocket
of the Respondent as income in any of the years in
question. How then can it be said to have reached his
pocket as income on his subsequeut reinvestiture."
For determining the person liable to pay tax, the test laid
down by the court was to find out the ·person entitled to that
income.
An attempt was made by Mr. Mahajan to distinguish
this case on the ground that under the corresponding English
statute the liability to tax in respect of income from property is
not laid on the owner of the property. It is true that s. 82 of
the English Income-tax Act, 1952 is worded differently. But the
principles underlying the two statutes are identical.
This
is
clear from the various provisions in that Act.
The conclusion reached by Costello, J. in Official Assignee's
case(') receives support from the decision of the Privy Council in
Trustees of Sir Currimbhoy Ibrahim Baronetcy Trust v. Commissioner of Income-tax, Bombay(2 ). The Counsel for the appellant
was unable to point out to us any decision which has taken a view
contrary to that taken in Official Assignee's case( 1).
The learned judges of the High Court in reaching their conclusion that the assessee was not the owner of the property in the
relevant assessment years, took assistance from the decisions of
English courts dealing ·with the question of levy of income-tax
on the income from enemy properties taken possession of by the
Custodian during war.
In those cases the English judges have
enunciated the .theory of suspended ownership. We do not think
that we· need call assistance from those decisions.
Mr. Mahajan contended that despite the fact that evacuee
property was taken over by the Custodian and that he had been
conferred with large powers to deal with it, an evacuee from
Pakistan who owned that property before he migrated to India
still continued to be the owner of the property. For this contention of his he placed reliance on some of the observations of this
Court in Amar Singh v. Custodian, Evacuee Proverty, Punjab( 8 )
Therein delivering judgment of the Court J agannadhadas, J
observed (at p. 815 of the report) :
(I) 5 l.T.R. 233.
12) 2, 1.T.R. 148.
13) [1957] S.C.R. 801
SUPREME COURT lUJ PORTS
Ll 972] L S.C.lt
"Stopping here it will be seen that the position, jn
its general aspect, is that all evacuee property js vest~
in the Custodian.
But the evacuee has not lost his
ownership in it. 'I'he law recognised his ultimate ownership subject to certain lin1itations.
The evacuee may
come back and obtain return of his property, as also
an account of the management thereof by the Custodian."
Those observations have to be understood in the context in
which they were made. Therein, their Lordshlps were considering whether the right of an evacuee in respect of the property
left by him in the country from which he migrated was property
right for the purpose of Art. 19(1) (I) (f) of the Constitution.
No One denies that an evacuee from Pakistan has a residual right
in the property that he left in Pakistan. But the real qtiestion is,
can that right be considered as ownershlp within the meaning
of s. 9 of the, Act.
As mentioned earlier that section seeks to
bring to tax income of the property in the hands of the owner.
Hence the focus of that section is on the receipt of the income.
The word "owner" has different meanings in different contexts.
Under certain circumstances a lessee may be considered as the
owner of the property leased to him.
In Stroud's Judicial Dictionary (3rd Edn.), various meanings of the_ word "owner" are
given.
It is not necessary for our present purpose to ·examine
what the word "owner" means in different contexts. The meaning that we give to the word "owner" in s. 9 must not be such
as to make that provision capable of heing made an instrument
of oppression. It must be in consonance with the principles
underlying the Act.
Mr. Mahajan next invited our attention to the observations
in Pollock on Jurisprudence (6th. Edn. 1929) 178-80 : "Ownership may be described as the entirety of the powers of use and
disposal allowed by law. . .
The owner of a thing is not necessarily the person who at _a given time has the whole power of use
and disposal; very often there is no such person. We must look
for the person having the residue of all such power when we
have accounted for every detached and limited portion of 'it;
and he will be the owner even if the immediate power of control
and use is elsewhere".
It is not necessary to consider whether those
observations
hold good even now because of the various legislative measures
enacted during the last about forty years after those observations
were made. Suffice it tO say that those observations are inapplicable to the case of the "owner" under s. 9 of the Act.
A
c
D
E
F
G
11
A
B
c
D
E
F
G
H
JODHA MAL v. C.I.T. (Hegde, J.)
649
Mr. Mahajan in support of his contention next placed reliance
on the decision of the Patna Higli Court in Raja P. C. Lal Choudhary v. Commissioner of Income-tax(').
Therein the question
was whether the receiver of a property appointed by court was
the owner of the property for the purpose of s. 9 of the Act.
The court came to the conclusion that he was not the owner as
the property did not vest .in him.
In fact in the course of the
judgment, the court made a distinction between a receiver and
a trustee and an official assignee.
In our 'opinion this decision
instead of supporting the case of the appellant may lend some
support to the contention of the Revenue.
Reliance was · next placed on the decision of the Calcutta
High Court in Nawab Bahadur of Murshidabad v. Commissioner
of Income-tax, West Bengal(2 ). The facts of that case were:
Properties which belonged to the ancestors of the Nawab of
Murshidabad as Rulers, were, some time after the territories had
been conquered by the British, settled by the Secretary of State
for India in the year 1891 on the then Nawab of Murshidabad
under a deed of settlement which provided that such properties
"shall henceforth and for ever be held and enjoyed by the said
Nawab Bahadur and such one among his lineal male heirs as
may be successively entitled to hold the said title in perpetuity,
with and subject to the incidents, power, limitations and conditions as to the inalienability and otherwise hereinafter contained".
One of the conditions was that he was not entitled to sell or
alienate the properties except with the approval of the Governor
of Bengal.
The Settlement deed was confirmed by Act XV of
1891. The question arose whether Nawab of Murshidabad was
liable to pay tax in respect of the income of those properties
under s. 9 of the Act. The Court held that whatever might have
been the original nature of the "State properties'', after the deed
of settlement and the Act of 1891, as the dual status of the Nawab
as the holder of the State and as an individual ceased, it could
not be said that the Nawab for the time being was not the "owner"
of such properties for the purposes of s. 9 of the Act and the
Nawab was therefore liable to be assessed to income-tax on the
income of such properti.es. The Court further held that the word
"owner" in s. 9 of the Act applies to owners of the whole income.
even though they are under certain restrictions with regard to the
alienation of the properties.
We are unable to see how this
decisi,on gives any support to the contentions advanced on behalf
of the assessee.
After giving our careful consideration to the question of Jaw
under consideration, we have come to the conclusion that the
liJ 16, J.T.R. 123,
Cl 28, J.T.R. 510.
650
SUPREME COURT REPORTS
(1972) l S.C.R.
assesse.i was not the owner of Neadous Hotel during the relevant
assessment years for the purpose of s. 9 of the Act. Hence these
appeals fail and they are dismissed. In the circumstances of the
case we make no order as to costs in the~e appeals.
G.C.
Appeals dismissed.
A
B