Law:

Section:

JUDGMENT Veeraswami, J.-This is a reference at the instance of the Commissioner of Income-tax and the question that arises is, whether a certain receipt, which was included in the taxable income for the assessment year 1958-59, was of a capital or revenue nature. That it was of a casual and nonrecurring nature was also raised but it is not reiterated before us. The Tribunal held, differing from the view of the Income-tax Officer and the Appellate Assistant Commissioner of Income-tax, that the receipt was of a capital nature. One Arunachalam Chettiar died on February 23, 1938, leaving a considerable estate, including properties in Ceylon. He was married three times. By his first wife he had a son with a similar name, who died on July 9, 1934, leaving his second widow, Umayal Achi. His mother, Valami Achi, had died long before him. Arunachalam Chettiar (senior) left him surviving his two widows, Lakshmi Achi and Nachiar Achi, and also his last will and testament by which he nominated his executors and directed them to arrange for adoption of a son to each of his widows as also the widow of his pre-deceased son. When Arunachalam Chettiar (junior) died, the Government of Ceylon levied estate duty on his half share in the estate, which belonged to the joint family consisting of himself and his father. The levy as reduced in April, 1942, amounted to Rs. 2,21,743. This amount was paid on March 31, 1943. In the meantime, litigation between the three widows having arisen, the Court of the Subordinate Judge of Devakotta appointed receivers to take possession of the entire estate. On May 16, 1942, they instituted a suit in the District Court of Colombo questioning the validity of the levy of estate duty on certain grounds. On the death of Arunachalam Chettiar (senior) a similar demand of estate duty on his share of the properties in Ceylon was made and a total sum of Rs. 6,33,601.76 was paid by March 31, 1943. On November 8, 1949, the District Court of Colombo set aside the levy of estate duty in the case of Arunachalam Chettiar (junior) and affirmed the levy in the other case. On October 12, 1953, the Supreme Court at Ceylon, however, allowed the appeal of the receivers…

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