Case: Prince Muffakhan Jah Bahadur Vs. Commissioner of Expenditure-Tax, Hyderabad

5. We shall now set out the material facts. The two assessees who are the appellants in these appeals are thegrandsons of theformer Nizam of Hyderabad. On January 8, 1950, the Nizam constituted a trust under which his twolaw were given certain benefits. Each of the two grandsons were entitled to get every year a sum of Rs. 1,26,000/from the trustees. The trust created was followed up by a tripartite agreement between the Nizam, theof India and the trustees. The corpus of the trust was deposited with the Government of India and the Government of India was to pay to the trustees certain sums of money every year in India under the tripartite agreement. The trust deed provided that the trustees shall pay to the two beneficiaries every year Rs.The payment is required to be made in India. After the execution of this trust the twograndsons of theNizam as well as hiswent and resided in London. Every year the trustees were realizing the amount due from the Government and remitting the amounts due to the beneficiaries to London and those amounts were expended by them in London. These facts are all admitted. The question for decision is whether the expenditure incurred by the two grandsons, who are beneficiaries under the trust is exempt under Section 5 (o) (ii) of the Act. The contention of the assessee is that the amount in question was realized by them in London and hence they are entitled to the benefit of Section 5 to) (ii). That contention has been rejected by the Tribunal. The Tribunal came to the conclusion that the amount in question accrued in India. The trustees were liable to pay that amount to the assessees only in India. When the trustees remitted that amount to the assessees to London, they were merely functioning as the agents of the assessees. That being so the Tribunal held that the amounts in question were realized by the assessees in India. This finding was assailed on behalf of the assessees before the High Court but the High Court rejected the contention of the assessees and affirmed the decision of the Tribunal.

Reasoning: Therefore all that we have to see is whether that finding is either perverse or not based on any evidence. We are unable to agree with the learned Counsel for the assessee that the finding in question is either perverse or the same is not based on any evidence. It was open to the Tribunal to come to the conclusion on the facts and circumstances of the case, that the trustees acted under instructions from the assessees. That appears to be a reasonable inference. If the trustees were sending the amounts in question to the assessees to London under instructions from the assessees as found by the Tribunal, in law it means that the assessees had realized those amounts in India itself and consequently they are not entitled to the exemption provided in S. 5 (o).