Law:

Section:

Section 10(3), read with section 4, of the Income-tax Act, 1961 [Corresponding to section 4(3)(vii), read with section 3, of the Indian Income-tax Act, 1922 - Casual and non-recurring receipts - Assessment years 1953-54 to 1956-57 and 1958-59 to 1962-63 - On merger of Dholpur State in Union of India - Ex-ruler was informed by Government of India that property 'Dholpur house' would be considered to be property of Rajasthan State but one third of rental value would be paid to him as purely ex-gratia arrangement, and in event of its sale, ruler would be entitled to one-third of sale price minus share of Government of India in form of 75 per cent of incremental value - Whether amounts of rent paid to petitioner were exempt from payment of income-tax as they did not form part of his taxable income, being receipts of casual and non-recurring nature - Held, yes Section 2(e) of the Wealth-tax Act, 1957 - Assessment years 1953-54 to 1956-57 and 1958-59 to 1962-63 - Whether on facts under heading casual and non-recurring receipt promise by Government of India to make periodical payments to assessee did not constitute asset within meaning of section 2(e) for inclusion in his net wealth and petitioner could not be considered to possess any property or any right in property by virtue of arrangement arrived at by Government of India which was ex-gratia - Held, yes FACTS There was a partial building known as 'Dholpur House' at New Delhi. It belonged to Ruler of the erstwhile Dholpur State. On the merger of the Dholpur State the question arose whether the 'Dholpur House' should be treated as private property of the ruler or the property of the State of Rajasthan. By letter dated 20-10-1951, the Government of India informed the said Ruler that the said house would be considered to be the property of the Rajasthan State but 1/3rd of the rental value would be paid to His Highness as a purely ex gratiaarrangement, and in the event of the sale of the house, His Highness would be entitled to 1/3rd of the sale price minus the share of the Government of India in the form of 75 per cent of the incremental value. After the death of the ruler, further correspondence ensued between the…

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