MAHARAJADHIRAJA SIR KAMESHWAR SINGH vs. COMMISSIONER OF INCOME-TAX, BIHAR AND ORISSA.
What did the Supreme Court hold?
The Supreme Court held that the remuneration received by the appellant was not agricultural income and was therefore liable to tax. The Court reasoned that the source of the appellant's right to receive the remuneration was the covenant in the deed of trust for services rendered in managing the trust, not the right to receive rent or revenue from agricultural lands. The character of the income was altered when it was appropriated as remuneration for services. Unlike cases where a mortgagee in possession or a mutawalli who was also a beneficiary directly received income from agricultural property, the appellant here had no beneficial interest in the trust property and was not the direct recipient of the income in his capacity as a beneficiary. The Court distinguished the case of Commissioner of Income Tax, Bihar and Orissa v. Kameshwar Singh, where the mortgagee's receipt was considered agricultural income due to his legal ownership and direct dealing with cultivators. The appeal was dismissed.
What were the facts?
The appellant, Maharajadhiraja Sir Kameshwar Singh, executed a deed of trust settling certain lands for the maintenance of temples and Thakoorbaries. He was appointed the trustee and was entitled to 15% of the net income of these agricultural properties as remuneration. The appellant claimed that this remuneration, derived from agricultural income, was also exempt from tax under Section 4(3)(viii) of the Indian Income-tax Act, 1922, as its original character was not altered. The Income-tax Officer included Rs. 6,000 as income from non-agricultural properties. The Appellate Assistant Commissioner held the remuneration taxable as it was not agricultural income in the appellant's hands. The Income-tax Appellate Tribunal affirmed this. The High Court, agreeing with the Tribunal, held the remuneration taxable and answered the specific question against the assessee.
What were the issues?
1. Whether the amount of Rs. 21,274, paid to the assessee as remuneration in his character as Shebait of the trust properties, should be held exempt from taxation on the ground that it is agricultural income, under Section 4(3)(viii) of the Indian Income-tax Act, 1922, in light of the definition of agricultural income in Section 2(1) of the Act? Assessee's Contention: The appellant argued that the remuneration received was a fraction of the rent or revenue of agricultural lands and therefore, its original character as agricultural income was not altered. He relied on the principle that income derived from agricultural properties, when appropriated as remuneration, retains its agricultural character. Revenue's Contention: The revenue contended that the remuneration was received under a covenant in the trust deed for management services and not directly as rent or revenue from agricultural lands. Therefore, its character was altered and it was not agricultural income exempt from tax.
Which sections of the Income-tax Act were involved?
2(1), 4(3)(viii)
AI-generated summary — verify with the full judgment below
OctoLer 25. 74 SUPREME COURT REPORTS MAHARAJ ADHIRAJ A SIR KAMESHWAR SINGH v. [1961] COMMISSIONER OF INCOME-TAX, BIHAR AND ORISSA. (S. K. DAS and J: C. SHAH, JJ.)
Income Tax-Exemption from taxation-Agricultural income from trust properties-Trustee's remuneration a percentage of such income and resting on trust deed-Remuneration, whether agricul- tural income-Indian Income-tax Act, I922 (II of I922), ss. z(I), 4(3)(viii).
The appellant executed a deed of trust settling some of his lands for the maintenance of certain temples and Thakoorbaries.
He was to be the trustee of the institutions and was to get 15% of the net income of those lands as trustee's remuneration.
Before the income-tax authorities the appellant claimed that as the income received from agricultural properties of the trust by him as trustee was agricultural income in his hands and was by virtue of s. 4(3)(viii) of the Indian Income-tax Act, r922, exempt from liability to pay tax, the remuneration which by the covenant contained in the deed of trusr he received was also exempt under that section because, when he appropriated a fraction of the rent or revenue of agricultural lands towards his
The order continues below.
Read the full judgment
A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.
The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.
Recent GST High Court judgments
Search GST case law →- Manoj Kumar Das vs. The State Of BiharPatna · 15 Oct 2026
- M/S Superwealth Financial Enterprises Private Limited, Khordha vs. Joint Commissioner Good And Service Tax Central Excise, BhubaneswarOrissa · 15 Oct 2026
- Simanchal Sahoo vs. Commissioner Of CT And GST, Odisha, CuttackOrissa · 15 Oct 2026
- M/S. Prafulla Chandra Khatua, Mayurbhanj vs. The State Tax Officer Of CT And GST, MayurbhanjOrissa · 15 Oct 2026
- M/S.Sidhivinayak Roadways, Sundergarh vs. Commissioner Of GST And Central Excise, Rourkela Commissionerate, RourkelaOrissa · 15 Oct 2026
