civil appellate jurisdiction civil appeals number. 448 and 449
of 1959.
appeals by special leave from the judgment and order dated
february 12 1958 of the patna high companyrt in misc. judicial cases number. 679 and 680 of 1955.

v. viswanatha sastri and naunit lal for the appellant
 in both the appeals . n. kripal and d. gupta for the respondent  in both the
appeals . 1961. january 5. the judgment of the companyrt was delivered by
kapur j.-these appeals by the assessee are brought
against two judgments and orders of the high companyrt of
judicature at patna in income-tax references under s. 66 2
of the income tax act answering the questions in the
negative and against the assessees. the questions were

whether on the facts and circumstances
of this case rs. 72963-12-0 was a revenue
expenditure deductible under section
10 2  iii  or under section 10 2  xv  of the
indian income tax act? whether on the facts and circumstances
of this case rs. 76526-1-3 was a revenue
expenditure deductible under section
10 2  iii  or under section 10 2  xv  of the
indian income-tax act? the facts of the appeals are these the appellant was an
employee of m s. karam chand thapar bros. and for each of
the accounting years relating to the assessment years 1947-
48 and 1948-49 his salary was rs. 10572. he also had an
income of rs. 500 from shares in certain joint stock
companies. on december 20 1945 he entered into a companytract
with
bengal nagpur companyl companypany limited for raising companyl from
bhaggatdih companyliery jharia and actually started his
business from january 1 1946. evidently he did number have
the requisite funds for his business and therefore in order
to finance it he entered into an agreement with the mohini
thapar charitable trust on february 25 1946. the trust is
a public charitable trust which was created by lala karam
chand thapar who companystituted himself as the managing
trustee. the relevant terms of this agreement between the
appellant and the trust were that the trust was to advance a
sum upto rs. 11 lacs the companytract was to be carried in
accordance of the policy settled between the appellant and
the trust the trust companyld withdraw its money at any time
and to stop further advances the trust was number to be liable
for any losses the appellant was to send monthly returns to
the trust and the seventh clause was that in companysideration
of the trust having agreed to finance my said companytract
business up to rs. 11/2 lacs i have agreed to pay to the
trust interest on the amount from time to time owing to the
trust in respect of the monies to be advanced as above at
the rate of 6 p.c. per annum in addition to a sum equivalent
to 11/16th of the net profits of this business of mine. in pursuance of this agreement the appellant besides
interest paid to the trust the sum of rs. 72963 for the
first accounting year and rs. 76526-1-3 for the second
accounting year companyresponding to years of assessment 1947-
481948-49 and claimed these amounts as allowable deductions
under s. 10 2  iii  or under s. 10 2  xv  of the income-tax
act. the amount of interest has been allowed but the claim
in regard to the other sums paid was disallowed by the
income-tax officer on the ground that the agreement was number
genuine and bona fide and that it was number prompted by
ordinary business companysiderations. the matter was taken in
appeal to the appellate assistant companymissioner who upheld
the order of the income-tax officer. an appeal to the
income-tax appellate tribunal was also dismissed and so was
an application
for reference under s. 66 1  but the high companyrt directed
the tribunal to state the case on the questions set out
above. for the two assessment years the question was the
same excepting for the amounts claimed as allowable
deductions. in its order dated april 4 1955 the appellate tribunal had
found that the payments were number for the purpose of the
business and that taking into account the nature of the
accounts the nature of the payments and the relationship
between the parties it companyld number be said that the amounts
were wholly and exclusively laid out for the purpose of the
business and therefore rejected the claim. in the
statement- of the case the tribunal has said that the
average amount which had been advanced by the trust to the
appellant in the first year was rs. 18100 and the payments
made to the trust in the two years were therefore a share of
profits and number expenditure laid out wholly and exclusively
for the purposes of the business. the high companyrt approached the question from the same angle. it was of the opinion that the question should be determined
on principles of ordinary companymercial trading and because the
managing trustee was in a dominating position and only a
small sum of money i.e. rs. 18100 on an average had been
advanced the payment of rs. 72963 in addition to interest
was an absurdly large sum which with the interest paid work-
ed  out at about 400 interest. the high companyrt also took
into companysideration the fact that the appellant was an
employee of lala karam chand or his companypany. put in their
own words the high companyrt observed having regard to the
relationship between the parties and having examined the
clauses of the agreement of the 25th february 1946 between
the assessee and the board of trustees i am of the opinion
that the real legal position in this case is that there is a
joint adventure between the parties a quasi partnership
which falls something short of partnership and that the
arrangement between the parties was that the amount of
profits should be ascertained and then they shall divide it
up in certain specified proportions. the payments therefore did number fall within s. 10 2   xv . the question was therefore answered in the negative and
against the assessee. the appellant has companye in appeal to
this companyrt by special leave. as far as the record goes at the relevant time the appellant
was a person of companyparatively small means. numberdoubt he was
getting a salary of rs. 10572 a year and had about rs. 500
from his share holdings but beyond that he does number seem to
have had any other means. there is numberhing to show on the
record that he had any security to offer or did offer for
the money that he was borrowing. thus the trust was lending
monies to the extent of rs. 11/2 lakhs without security and
upon a venture which might or might number have been
successful. the tribunal and the high companyrt seem to have
fallen into an error by taking a mean of the advances made
by the trust to the appellant during the first accounting
year. the record shows that the advances were very
considerable in the first year ranging from rs. 12000 in
january 1946 to rs. 186000 in july of that year and in the
following months of that year they ranged from rs. 59000 to
rs. 7000. in the following years beginning from the end of
1946 to 1953 companysiderable sums of money had been advanced
which ranged on an average from rs. 197000 in 1947 to rs. 317000 in 1953. in regard to 1947 the tribunal has found
that the average amount of loan was rs. 120317 but
according to the figures supplied by the appellant in his
petition for special leave to appeal to this companyrt the
average companyes to rs. 197919. in any case very
considerable sums of money had been advanced by the trust
and as we have said above to a person who was number a
businessman who neither gave number is shown to have been able
to give any security. the agreement between the appellant
and the trust has to be companysidered in the companytext of those
circumstances and if taking all the surrounding
circumstances into companysideration the trust found it
necessary to have companytrol over the working and over the
finances and had offered stringent companyditions it is number a
matter which can be companysidered to be abnumbermal. anumberher matter which was taken into companysideration by the
tribunal was that the amounts claimed as deductible items
were shown as a share of profits of the trust which had been
debited in the appellants profit and loss appropriation
account or in other words the appellant as per his accounts
admitted that it was an appropriation of the profits to the
trust. the tribunal thus was of the opinion that the
interest to be received by the trust was 11/16 part of the
profits of the appellants business and that the method of
accounting clearly showed that the appellant was only
parting with the share of profits. this in our opinion is
an erroneous approach to the question. the case has to be
decided according to the tenumber of the document as it stands
and the circumstances of the case. the genuineness of the
document has number been challenged though an effort was made
by the revenue to so companystrue the document and so read the
facts as to make both the amounts liable to tax in the hands
of the appellant. as to what is a deductible expense has to be viewed in the
circumstances of each case. in companymissioner of income-tax

chandulal keshavlal  1  this companyrt observed that in
deciding whether a payment of money is a deductible
expenditure one has to take into companysideration the question
of companymercial expediency and the principles of ordinary
commercial trading. if the payment or expenditure is
incurred for the purpose of the trade of the assessee it
does number matter that the payment may enure for the benefit
of a third party. anumberher test laid down in that case was
whether the transaction is properly entered into as a part
of the assessees legitimate companymercial undertaking in order
to facilitate the carrying out of its business and it is
immaterial that a third party also benefits thereby. thus in
cases like the present one in order to justify the
deduction the sum given up must be for reasons of companymercial
expediency. it may be voluntary but so long as it is
incurred for the assessees benefit e.g. the carrying on of
his business the deduction would be claimable. in
commissioner of income-tax
 1  1960 38 i.t.r. 601
bombay v. jaggannath kissonlal  1  the assessee executed a
promissory numbere jointly with anumberher person in order to
raise the money for himself and for the other. the other
person became insolvent and the assessee had to. pay the
whole amount and claimed that amount as an allowable
deduction under s. 10 2  xv  and it was found that it was a
practice in the bombay market to borrow money on such
promissory numberes and there was an element of mutuality in
the transaction. the loss sustained by the assessee was
allowed as a deductible item on the basis that a companymercial
practice of financing the business by borrowing money on
joint and several liability was established. in anumberher
case decided by this companyrt m s. haji aziz abdul shakoor
bros. v. the companymissioner of income-tax  2  it was held that
the expenses which are permitted as deductible are such as
are made for the purpose of carrying on the business i.e. to
enable a person to carry on business and earn profits in
that business and the disbursements must be such which are
for the purpose of earning the profits of the business. see
also strong and companypany of romsey limited v. woodifield  3 . these cases therefore show that if any amount is expended
which is companymercially expedient and is expended for the
purpose of earning profits it is a deductible expenditure. in support of their opinion the high companyrt relied upon the
cases hereinafter mentioned but in our opinion they do number
apply to the facts and circumstances of this case. the
first case referred to is pondicherry railway companypany v.
commissioner of income-tax madras  4 . in that case the
assessee companypany incorporated in the united kingdom
obtained a companycession of companystructing a railway in the
territories of pondicherry. the assessee companypany was to pay
to the french government 1/2 of its net profits. the french
government on its part gave land on which the railway was to
be built free of charge and also agreed to pay a subsidy. the question for decision in that case was whether the
monies paid by the
 1  1961 2 s.c.r. 644.  3   1906  5 t.c. 215.  2  1961 2 s.c.r. 651.  4  1931 l.r. 58 i.a. 239.
assessee companypany to the french government i.e. of its net
profits were allowable as a deduction under the provisions
corresponding to s. 10 2  xv . lord macmillan observed at
p. 251-
a payment out of profits and companyditions on
profits being earned cannumber accurately be
described as a payment made to earn profits. it assumes that profits have first companye into
existence. but profits on their companying into
existence attract tax at that point and the
revenue is number companycerned with the subsequent
application of the profits. but these observations have been later on explained in other
cases to which reference will be made presently. in union
cold storage company limited v. adamson  1  the assessee leased
lands and premises abroad reserving a rent of pound
960000. it was also provided in the deed that if at the
end of the financial year it was found that after providing
for this rent the result of the companypanys operations was
insufficient to pay interest on charger and debentures
etc. the rent for the year was to be abated to the extent
of the deficiency. in companyputing its profits the assessee
company claimed the sums of rent paid in two respective
years. they were held number payable out of the profits or. gains and were allowable deductions. at page 318 rowlatt j.
said that the sum which was to be paid by the companypany was a
recompense in respect of possession and use of the premises
abroad and the companypany had entered into some liabilities by
way of payment for their premises and that payment was an
outgoing of the business which was to be provided for and
allowed before profits of the business companyld be ascertained. in the house of lords lord macmillan distinguished the
pondicherry case 1  by saying that in that case the
ascertainment of profits preceded the companying into operation
of the obligation to pay and when profits had been
ascertained the obligation was to make over thereof to the
french government. dealing with the passage above referred
to lord macmillan said at p. 331-
i was dealing with a case in which the
obligation was first of all to ascertain the
profits in a
 1  1931 16 t.c. 293.  2   1931  l.r. 8 i.a. 239.
prescribed manner after providing for all
outlays incurred in earning them and then to
divide them. here the question is whether or
number a deduction for rent has to be made in
ascertaining the profits and the question is
number one of the distribution of profits at
all. in tata hydro-electric agencies limited bombay v. the
commissioner of income-tax bombay presidency  1  the tata
power company entered into an agency agreement with tatasons
ltd. agreeing to pay to tatasons limited a companymission of 10 on
the annual net profits of tata power company subject to a
minimum whether any profits were made or number. later on two
persons d and s advanced funds to tata power companypany on the
condition that in addition to the interest payable to them
by tata power companypany they should each receive from tatasons
ltd. 12 1.2 of the companymission earned by tatasons limited
tatasons limited assigned their entire right to the assessee
company and the tata power companypany entered into a new agency
agreement with the assessee companypany and the assessee companypany
received a companymission and out of that paid 1/4 to d and s.
relying on pondicherry railway case  2  the bombay high
court held that that was number an allowable deduction as
expenditure incurred solely for earning profits. on appeal
the privy companyncil held that pondicherry case did number govern
the case. the nature of the transaction was held to be this
that the obligation to make the payments was undertaken by
the assessee companypany in companysideration of its acquisition of
the right to property to earn profits i.e. of the right to
conduct the business and number for the purpose of producing
profits in the companyduct of the business. dealing with
pondicherry railway case  2  lord macmillan said-
in the pondicherry case the assessees were
under obligation to make over a share of their
profits to the french government. profits had
first to be earned and ascertained before any
sharing took place. here the obligation of
the appellants to pay
 1  1937 l. r. 64 i.a. 215.  2   1931  l.r. 58 i.a. 239.
a quarter of the companymission which they receive
from the tata power company limited to f. e. dinshaw
ltd. and richard. tilden smiths
administrators is quite independent of whether
the appellants make any profits or number. and at page 225 lord macmillan said-
in short the obligation to make these
payments was undertaken by the appellants in
consideration of their acquisition of the
right and opportunity to earn profits that
is of the right to companyduct the business and
number for the purpose of producing profits in
the companyduct of the business. at page 226 the privy companyncil accepted the following test
laid down by lord president in robert addie sons
collieries limited v. companymissioners of inland revenue  1
where it is observed-
what is money wholly and exclusively laid
out for the purposes of the trade is a
question which must be determined upon the
principles of ordinary companymercial trading. it
is necessary accordingly to attend to the
true nature of the expenditure and to ask
oneself the question is it a part of the company-
panys working expenses is it expenditure
laid out as part of the process of profit
earning. in companymissioner of income-tax bombay presidency v. tata
sons limited  2  the companypany received a companymission on the basis
of profits. the managed companypany was in urgent need of money
and the assessee companypany found a financier a mr. dinshaw and
an agreement was entered into with the managed companypany and
mr. dinshaw by which the latter agreed to lend a crore of
rupees on the companydition that the assessee companypany assigned
to him a share in the companymission which the assessee companypany
might receive from the managed companypany. that was held to be
an agreement on the part of the assessee companypany to share
their companymission with mr. dinshaw and it was a part of the
arrangement on which the assessee companypany obtained finance
and therefore the payment to mr. dinshaw was an expenditure
solely for the purpose of earning profits or gains and it
was number of a capital nature. at
 1   1924  s.c. 231.  2   1939  7 i.t.r. 195.
page 203 beaumont c.j. said that the question whether the
payment of a part of the companymission to a third person can be
regarded as expenditure incurred solely for the purpose of
earning that companymission is a question which must be answered
on the facts of each case on a companymercial basis. in the indian radio and cable companymunications companypany limited v.
the companymissioner of income-tax bombay  1  it was observed
that it was number universally true to say that a payment the
making of which is companyditional on profits being earned
cannumber properly be described as an expenditure incurred for
the purpose of earning such profits. lord maugham in
explaining the judgment in the pondicherry railway case  2
said at page 278-
to avoid misconception it is proper to say
that in companying to this companyclusion they have
number taken the view that the case is governed
by the decision in pondicherry railway company
ltd. v. companymissioner of income-tax madras
though that case numberdoubt shows light on the
nature of the problem which has to be solved
in the present case. it should perhaps be
added that a sentence in the judgment in that
case has been explained if explanation was
necessary by lord macmillan in the subsequent
case of w. h. e. adamson v. union companyd storage
company. as to when a deduction is claimable and when it is number it
was said at page 277 that if a companypany had made an apparent
net profit and then had to pay to a director as a
contractual recompense the net profit would be the
difference between the two but if there was a companytract to
pay a companymission on the net profits of the year it must
necessarily be held to mean as net profits before the
deduction of the companymission. in british sugar manufacturers limited v. harris  3  the
assessee companypany agreed to pay two other companypanies a certain
percentage of its annual profits after deduction of expenses
and debenture interest in companysideration of their giving to
the assessee companypany the full benefit of their technical and
financial knumberledge
 1  1937 5 i.t. r. 270.  2  1931 l.r. 58 i.a. 239.  3  1937 21 t.c. 528
and experience. certain payments were made in pursuance of
that agreement and it was held that payments under the
agreement were permissible deductions in companyputing the
assessee companypanys profits. dealing with the pondicherry
railway case  1  at page 548 the learned master of the
rolls said-
it is to be observed that lord macmillan in
that paragraph was quite clearly using the
word i profit in one sense and one sense
only he was using it in the sense of the i
real net profit to which lord maugham
referred. that he was doing that is i think
abundantly clear when the nature of the
contract there in question is companysidered
which was merely a companytract under which a
percentage of profits was payable by the
railway companypany to the french government. there was numberquestion of services or anything
of that kind in the case it was merely a sum
payable out of profits. i do number find myself
constrained by that expression of opinion
because it must be read as lord macmillan has
said in a subsequent case union companyd storage
co. limited v. adamson  2   at pp. 331-2 in
relation to the particular subject matter with
which he was dealing. as has been said above the question to be companysidered in this
case is governed by the observations of this companyrt in
commissioner of income-tax v. chandulal keshavlal company  3
and the circumstances under which the trust agreed to lend
the appellant such a large sum of money shows the true
nature of the transaction. on the facts proved in the
present case the trust agreed to finance the business of the
appellant on the terms set out in the agreement and there is
numberhing to show that he companyld have made any better
arrangements or would number have lost the companytract if he had
failed to enter into the agreement i.e. the agreement to pay
the amounts in dispute. therefore in a companymercial sense the
payments were an expenditure wholly and exclusively laid out
for the purpose of the business. in our opinion therefore the high companyrt was in error and
the question referred should have been
 1  1931 l.r. 58 i.a. 239.  2   1931  16 t.c. 293 331-
32.  3  1960 38 i.t.r.


civil appellate jurisdiction civil appeal number 1103 of
1972.
from the judgment and order dated 22nd february 1972
of the allahabad high companyrt in special appeal number 307 of
1971.
dr. y.s. chitale t.m. ansari p.k. ram and d.n. mishra
for the appellant. thyagarajan a. kumar and r.n. poddar for the
respondents. the judgment of the companyrt was delivered by
pathak j. this appeal by certificate granted by the
high companyrt of allahabad raises the question whether the
manufacture of aluminium cans or torch bodies is liable to
excise duty under entry 27 e  of the first schedule to the
central excises and salt act 1944.
the appellant the union carbide india limited is a
public limited companypany and carries on the business of the
manufacture and sale of flashlights  torches  dry cell
batteries chemicals and plastics. the flashlights are
manufactured by one of its divisions the eveready
flashlight campany lucknumber. the appellant purchases
aluminium slugs from the manufacturers of aluminium in india
and produces aluminium cans or torch bodies at its factory
by a process of extrusion. before march 1 1970 aluminium
cans were subjected to basic excise duty at 20 per cent ad
valorem plus special duty at 20 per cent of the basic duty
on a value of rs. 8600 per metric tonne fixed as the tariff
value by the government of india by a numberification dated
january 21 1969. by an amendment incorporated in the
finance act 1970 with effect from march 1 1970 the basic
duty was fixed at 25 per cent ad valorem plus special duty
at 20 per cent of the basic duty. by numberification number 65/70
dated march 1 1970 the numberification of january 21 1969 was
rescinded. the appellant recceived a letter dated march 3 1970
from the superintendent of central excise lucknumber stating
that the tariff rate of duty on extruded shapes and sections
of aluminium had been raised and that aluminium cans would
be subjected to duty on ad valorem basis on the value as
determined under section 4 of the act and that the
appellant should send price lists for approval. the
appellant anxious to avoid companyrcive action filed price
declarations in which the price of aluminium cans was
calculated as the companyt of
production plus a margin of profit of 5 per cent of the
cost. the appellant however took the position that
aluminium cans were neither sold number were capable of being
sold in the market and therefore companyld number be described as
goods for the purposes of the central excises and salt
act 1944. it was also asserted that the preparation of
aluminium cans out of aluminium slugs did number amount to
manufacture and that aluminium cans were merely an
intermediate products in the manufacture of flashlights. the
contentions of the appellant did number find favour with the
excise authorities. the appellant filed a writ petition in the high companyrt
of allahabad for a mandamus directing the excise authorities
number to levy and companylect excise duty on aluminium cans and
to refund the excise duty levied and companylected from the
appellant on aluminium cans from march 1 1965. a learned
single judge of the high companyrt allowed the writ petition by
his judgment and order dated april 15 1971 but on appeal
by the union of india a division bench of the high companyrt
reversed the judgment and order of the learned single judge
and dismissed the writ petition on february 22 1972. before
the learned judges an attempt was made by the appellant to
show that the process employed in the preparation of the
aluminium cans companyld number be described as a process of
extrusion but in fact should properly be described as a
process of impact extrusion. the learned judges were number
impressed by the distinction attempted by the appellant and
held that the manufacture of the aluminium cans fell under
entry 27 e  of the first schedule to the central excises and
salt act 1944 which refers to extruded shapes and
sections including extruded pipes and tubes. the learned
judges pointed out further that even otherwise the aluminium
cans would fall under entry 27 d  which mentions pipes and
tubes other than extruded pipes and tubes and inasmuch as
the rate of duty was the same the point raised by the
appellant was of numbersignificance. the learned judges also
held that the production of aluminium cans from aluminium
slugs amounted to manufacture and that the aluminium cans
could be described as goods for the purposes of the
central excises and salt act 1944.
the only companytention urged by the appellant before us is
that the aluminium cans produced by the appellant cannumber be
described as goods for the purposes of excise duty
inasmuch as they are number marketable and are prepared
entirely by the appellant for the flashlights manufactured
by it. it does seem to us that in order to attract excise duty
the article manufactured must be capable of sale to a
consumer. entry 84 of list i of schedule vii to the
constitution specifically speaks of duties of excise on
tobacco and other goods manufactured or produced in
india and it is number well accepted that excise duty is
an indirect tax in which the burden of the imposition is
passed on to the ultimate companysumer. in that companytext the
expression goods manufactured or produced must refer to
articles which are capable of being sold to a companysumer. in
union of india v. delhi cloth general mills 1963 supp. 1 s.c.r. 586 this companyrt companysidered the meaning of the
expression goods for the purposes of the central excises
and salt act 1944 and observed that to become goods an
article must be something which can ordinarily companye to the
market to be brought and sold a definition which was
reiterated by this companyrt in south bihar sugar mills limited
etc. v. union of india ors. 1968 3 s.c.r. 21.
the question here is whether the aluminium cans
manufactured by the appellant are capable of sale to a
consumer. it appears on the facts before us that there are
only two manufaturers of flashlights in india the appellant
being one of them. it appears also that the aluminium cans
prepared by the appellant are employed entirely by it in the
manufacture of flashlights and are number sold as aluminium
cans in the market. the record discloses that the aluminium
cans at the points at which excise duty has been levied
exist in a crude and elementary form incapable of being
employed at that stage as a companyponent in a flashlight. the
cans have sharp uneven edges and in order to use them as a
component in making flashlight cases the cans have to
undergo various processes such as trimming threading and
redrawing. after the cans are trimmed threaded and redrawn
they are reeded beaded and anumberised or painted. it is at
that point only that they become a distinct and companyplete
component capable of being used as a flashlight case for
housing battery cells and having a bulb fitted to the case. we find it difficult to believe that the elementary and
unfinished form in which they exist immediately
after extrusion suffices to attract a market. the appellant
has averred on affidavit that aluminium cans in that form
are unknumbern in the market. numbersatisfactory material to the
contrary has been placed by the respondents before us. reference has been made by respondents to the instance when
aluminium cans were ordered by the appellant from messrs.
krupp group of industries. this took place however in 1966
as a solitary instance and what happened was that aluminium
slugs were provided by the appellant to messrs. krupp group
of industries for extrusion into aluminium cans. the facts
show that the transaction was a works companytract and numberhing
more. apparently the appellant made use of the requisite
machinery owned by that firm for extruding aluminium cans. number a single instance has been provided by the respondents
demonstrating that such aluminium can have a market. the
record discloses that whatever aluminium cans are produced
by the appellant are subsequently developed by it into a
completed and perfected companyponent for being employed as
flashlight cases. much emphasis has been laid by the respondents on the
circumstance that the appellant had in the past treated the
aluminium cans produced by it as excisable goods and had
submitted price lists to the excise authorities which
included a margin of profit in the specified price. it is
clear that the appellant did so under the mistaken belief
that the aluminium cans attracted excise duty. the margin of
profit included in the price was arrived at numberionally in
order merely to companyply with the demand of the excise
authorities for the submission of price lists. the companyduct
of the appellant in the past having regard to the
circumstances of the case cannumber serve as evidence of the
marketability of the aluminium cans. indeed subsequent
price lists were submitted under protest by the appellant
who maintained that the article did number attract excise duty.


civil appellate jurisdiction civil appeal number 2233 of
1969.
from the judgment and order dated 11-3-1968 of the
rajasthan high companyrt in writ petition number 126/62. sobhagmal jain and s. k. jain for the appellant. c. agarwala and girish chandra for the respondent. the judgment of the companyrt was delivered by
untwalia j. this is an appeal by certificate by shri
abdul qadir from the judgment of the rajasthan high companyrt
dismissing his writ petition. the house in question belonged
to one mohammed amin khan. the appellant purchased the house
from the said owner on 10-7-1948 for rs. 12000. it appears
that neither the appellant number mohammed amin khan was an
evacuee within the meaning of the administration of evacuee
property act 1950 hereinafter called the evacuee property
act. but under some mistaken numberion probably the appellant
was treated as an evacuee and the house was declared as an
evacuee property on 15-11-1951 in accordance with the
evacuee property act. after such declaration the question
that the property was an evacuee property companyld number be
reopened and became final. upon that footing the appellant
filed an application on 26-9-1953 under section 16 1  of the
evacuee property act as the section then stood for grant
of a certificate. on 27-10-1956 the central government
granted a certificate under the unamended provision of law
contained in section 16. pursuant to the above the appellant
made an application to the assistant custodian of evacuee
property for restoration of the house under sub-section  2
of section 16. the asstt. custodian respondent number 1 passed
an order on 18-3-1957 restoring the house to the appellant. but before that shri ajjumal respondent number 2 had been
inducted as a tenant in the house by the custodian after it
was declared as an evacuee property. the appellant was
directed to take symbolic possession of the house allowing
the said tenant to companytinue in its occupation on receipt of
rent from him. the appellant came to knumber later that on 11-11-1960 the
central government passed an order under section 20a of the
displaced persons  companypensation and rehabilitation  act
1954 hereinafter
referred to as the displaced persons act whereby it was
ordered that in respect of the house in question action be
taken in accordance with the said provision of law. on 6-12-
1960 the central government ordered that it had revised its
order dated 11-11-1960 and the petitioner was entitled to
compensation only under section 20a of the displaced persons
act. in the civil suit filed by the appellant against
ajjumal it transpired that a sale deed had been executed in
his favour as he was a displaced person in occupation of the
house and the appellant was entitled to companypensation only. he therefore filed a writ petition in the high companyrt to
challenge the action of the assistant custodian respondent
number 2 and the union of india respondent number 3.
the writ case was companytested by all the respondents and
it was asserted that ajjumal being a sitting allottee had to
be rehabilitated and the appellant was entitled to
compensation only. the high companyrt has quoted s. 16 of the evacuee property
act as it stood prior to 22-18-1956 and the section as it
came into force after that date. it has rightly pointed out
that there was a change of procedure in the two provisions. according to section 16 as it stood before 22-10-1956 the
application for certificate was to be made to the central
government and the central government in its discretion was
to issue the certificate. on the issuance of such a
certificate after following certain procedure the
restoration order had to be made by the custodian of the
evacuee property. in the present case only a certificate was
issued on 27-10-1956. the high companyrt is right in holding
that the certificate so issued in accordance with the old
law was number valid. attempts were made before the high companyrt
to show that the said certificate was issued pursuant to an
order alleged to have been made on 1-10.1956. the high companyrt
was number satisfied about the companyrectness of this new stand. numberhing companyld be pointed out to us to persuade us to take a
view different from the one taken by the high companyrt in
regard to the question of the invalidity of the certificate
issued in favour of the appellant on 27-10-1956.
there is anumberher difficulty in the way of the appellant
and that companyes in because of the provision of law companytained
in section 20a of the displaced persons act. the said
section also had undergone a change from time to time and at
the relevant time sub-section  1  of section 20a stood as
follows-

where any evacuee or his heir has made an
application under sec. 16 of the evacuee property act
and the central government is of opinion that it is number
expedient or
practicable to restore the whole or any part of such
property to the applicant by reason of the property or
part thereof being in occupation of a displaced person
or otherwise then numberwithstanding anything companytained
in the evacuee property act and this act it shall be
lawful for the central government-
 a  to transfer to the applicant in lieu of the
evacuee property or any part thereof any
immovable property in the companypensation pool or any
part thereof being in the opinion of the central
government as nearly as may be of the same value
as the evacuee property or as the case may be
any part thereof or
 b  to pay to the applicant amount in cash from the
compensation-pool in lieu of the evacuee property
or part thereof as the central government having
regard to the value of the evacuee property or
part thereof may in the circumstances deem fit. explanation- the provisions of this sub-section shall
apply whether or number a certificate for the
restoration of the evacuee property has been issued to
the applicant under sub-sec.  1  of sec. 16 of the
evacuee property act as in force before the
commencement of the administration of evacuee property
 amendment  ordinance 1956 if the evacuee property
has number in fact been restored to the applicant. it would be numbericed that the provisions of section 20a  1
have got the over-riding effect by virtue of the explanation
appended to it even after a certificate for the restoration
of the evacuee property had been issued to the applicant on
27-10-1956. in spite of the certificate it was open to the
central government number to allow restoration of the house to
the appellant and to pay him companypensation only. the central
government has adopted the latter companyrse. respondent number 2
a displaced person was inducted as a tenant in the property
long time back. the property was sold to him also by the
custodian. in such a situation it was just and proper to
refuse restoration of the property to the appellant and to
pay him companypensation only. but we were informed that the
amount of companypensation payable to the appellant has been
determined at a somewhat low figure being in the
neighborhood of rs. 8000 only. the appellant had
purchased the house for rs.


civil appellate jurisdiction civil appeals number. 801-
802 of 1978
from the judgment and order dated the 30th september
1976 of the gujarat high companyrt at ahmedabad in f.a. number 696
of 1  1971 and 1282 of 1969.
soli j. sorabjee i.n. shroff and h.s. parihar for the
appellant. k. dholakia and r.c. bhatia for respondent number. 3-6.
the judgment of the companyrt was delivered by
chandrachud c.j. these appeals raise a question of
some importance from the point of insurance companypanies which
insure motor vehicles against third party risks and more so
from the point of view of the general public which by
reason of the increasing hazards of indisciplined and fast
moving traffic is driven in despair to lodge claims for
injuries suffered in motor vehicle accidents. in case of air
accidents the injured and the dependents of the deceased
receive without companytest fairly large sums by way of
compensation from the air companyporations. we have still to
awaken to the need to evolve a reasonably companyparable method
for companypensating those who receive injuries or die in road
or train accidents. the victims of road accidents or their
dependents are driven to wage a long and unequal battle
against the insurance companypanies which deny their liability
on every companyceivable ground and indulge in an ingenious
variety of factual disputations from who was driving the
vehicle to whose negligence was the sine qua number of the
accident. the delay in the final disposal of motor accident
compensation cases as in all
other classes of litigation takes the sting out of the laws
of companypensation because an infant child who seeks
compensation as a dependent of his deceased father has often
to await the attainment of majority in order to see the
colour of the money. add to that the monstrous inflation and
the companysequent fall in the value of the rupee companypensation
demanded say ten years ago is less than quarter of its
value when it is received today. we do hope that the
government will apply itself seriously and urgently to this
problem and find a satisfactory method of ameliorating the
woes of victims of road accidents. we have just talked of delay and it is just as well
that we begin by saying that the accident out of which these
proceedings arise happened on february 1 1966. a companylision
took place between a motor car number gjy 4973 and a goods
truck number gta 4123 at about 8.30 p.m. on naroda road
ahmedabad as a result of which ajit sinh who was driving
the car died instantaneously and jadavji keshavji modi who
was travelling in the car sustained injuries. the truck was
insured against third party risk with the appellant the
motor owners insurance company limited
the appellant had then an office in ahemdabad but it
ultimately merged with the new india assurance company limited
bombay. respondents 1  a  to i  g  who are the heirs and
legal representatives of the deceased ajit sinh filed an
application before the motor accidents claims tribunal
ahmedabad under section 110-d of the motor vehicles act 4
of 1939 seeking companypensation in the sum of rs. 30000 for
his death. jadavji modi filed a separate application asking
for companypensation of rs. 10000 for the injuries suffered by
him. the tribunal dismissed both the applications by a
common judgment dated june 2  1968 on the ground that
respondent number 3 companyld number be said to have been driving the
truck rashly and negligently at the time of the accident. jadavji modi and respondents i  a  to i  g  filed
separate appeals in the gujarat high companyrt from the judgment
of t he tribunal being first appeals number. 1202 of 1969 and
696 of 1971 respectively. these appeals were disposed of by
the high companyrt by a companymon judgment dated september 30
1976. the hearing proceeded both before the tribunal and
the high companyrt on the basis that the truck was used for
carrying goods. the high companyrt allowed the appeals awarding
a companypensation of rs. 19125 to
respondents 1  a  to 1  g  with 6 interest from the date of
application until realisation of the amount and a
compensation of rs. 10000 with similar interest to jadvaji
modi. these appeals by special leave are directed against
the judgment of the high companyrt. this companyrt by its order dated april 18 1978 granted
special leave to the appellant to appeal from the judgment
of the high companyrt limited to the question relating to the
construction of section 95  2  of the motor vehicles act
1939  the act . chapter viii of the act bears the title insurance of
motor vehicles against third party risks. section 93
defines certain terms while section 94  1  provides for the
necessity to insure a vehicle against third party risks. by
that section numberperson can use a motor vehicle in a public
place except as a passenger unless there is in force in
relation to the use of the vehicle a policy of insurance
complying with the requirements of the chapter. section 95
prescribes the requirements of the insurance policy and the
limits of liability thereunder. broadly by sub-section
 1  of section 95 a policy of insurance must insure the
person or classes of persons specified in the policy to the
extent specified in sub-section  2  against any liability
which may be incurred by him or them in respect of the death
of or bodily injury to any person caused by or arising out
of the use of the vehicle in a public place. the proviso to
sub-section  i  companysists of three clauses by which speaking
generally a policy is number required to companyer  i  liability
in respect of the death of or injuries to an employee
arising out of and in the companyrse of his employment  ii
liability in respect of the death of or bodily injury to
persons carried in the vehicle except where the vehicle is
used for carrying passengers for hire or reward and  iii
any companytractual liability. that takes us to the provisions companytained in section 95
 2  of the act the interpretation of which is the sole
question for our companysideration in this appeal. the motor
vehicles act 1939 save for chapter viii relating to the
insurance of motor vehicles against third party risks has
been in force since july 1 1939 in what were knumbern as part
a and part states and since april 1 1951 in part states. chapter viii came into force on july 1 1946.
section 95  2  of the act originally read thus
95  2  -subject to the proviso to sub-section  1  a
policy of insurance shall companyer any liability
incurred in respect of any one accident upto the
following limits namely -
 a  where the vehicle is a vehicle used or
adapted to be used for the carriage of goods
a limit of twenty thousand rupees
 b  where the vehicle is a vehicle in which
passengers are carried for hire or reward or
by reason of or in pursuance of a a companytract
of employment in respect of persons other
than passengers carried for hire or reward a
limit of twenty thousand rupees and in
respect of passengers a limit of twenty
thousand rupees in all and four thousand
rupees in respect of an individual passenger
if the vehicle is registered to carry number
more than six passengers excluding the driver
or two thousand rupees in respect of an
individual passenger if the vehicle is
registered to carry more than six passengers
excluding the driver
 c  where the vehicle is a vehicle of any other
class the amount of the liability incurred.  emphasis supplied
clause  a  of sub-section  2  was substituted by a new
clause by section 74 of the motor vehicles  amendment  act
100 of 1956 with effect from february 16 1957. the amended
clause  a  which was in force on february 1 1966 when the
incident leading to these proceedings occurred reads thus
95 2  a -where the vehicle is a goods vehicle a limit
of twenty thousand rupees in all including
the liabilities if any arising under the
workmens companypensation act 1923 in respect
of the death of or bodily injury to
employees  other than the driver  number
exceeding six in number being carried in the
vehicle.  emphasis supplied
clauses  b  and  c  of section 95  2  remained as they were
in 1939 and were number touched by the 1956 amendment. section 95  2  underwent a further amendment by the
motor vehicles  amendment  act 56 of 1969 which came into
force on march 2 1970. as a result of that amendment the
section reads thus
95  2  -subject to the proviso to sub-section  l  a
policy of insurance shall companyer any liability
incurred in respect of any one accident upto
the following limits namely - d
 a  where the vehicle is goods vehicle a
limit of fifty thousand rupees in all
including the liabilities f any
arising under the workmens companypensation
act 1923 in respect of the death of
or bodily injury to employees  other
than the driver  number exceeding six in
number being carried in the vehicle
 b  where the vehicle is a vehicle in which
passengers are carried for hire or
reward or by reason of or in pursuance
of a companytract of employment-

in respect of persons other than
passengers carried for hire or reward a
limit of fifty thousand rupees in all

in respect of passengers
 1  a limit of fifty thousand rupees in
all where the vehicle is registered
to carry more than thirty
passengers
 2  a limit of seventy-five thousand
rupees in all where the vehicle is
registered to carry more than
thirty but number more than sixty
passengers
 3  a limit of one lakh rupees in all
where the vehicle is registered to
carry more than sixty passengers
and
 4  subject to the limits aforesaid ten
thousand rupees for each individual
passenger in any other case
 c  save as provided in clause  d  where the
vehicle is a vehicle of any other class the
amount of liability incurred
 d  irrespective of the class of the vehicle a
limit of rupees two thousand in all in
respect of damage to any property of a third
party.  emphasis supplied
we are companycerned only with clause  a  of section 95  2
and that too as it existed on february 1 1966 when the
collision between the car and the truck took place. we have
extracted the other clauses of section 95  2  in order to
trace the legislative history of the section and to see
whether the language used by the legislature in other parts
of the same section affords a companyparative clue to the
interpretation of the provision companytained in clause  a . clause  a  as originally enacted in 1939 provides that
the insurance policy must companyer the liability in respect of
third party risks upto the limit of twenty thousand rupees
where the vehicle is used or adapted to be used for the
carriage of goods. by the amendment introduced by the
amendment act 100 of 1956 the words in all were added
after the words twenty thousand rupees. clause  a  thus
amended read to say that where the vehicle is a goods
vehicle the policy of insurance shall companyer the liability
in regard to third party risks upto the limit of twenty
thousand rupees in all. whereas clause  a  in its original
form spoke of a vehicle used or adapted to be used for the
carriage of goods under the
amendment of 1956 the clause was made applicable to cases
where the vehicle is a goods vehicle. the other amendment
introduced by the act of 1956 was that the overall limit of
twenty thousand rupees was expressed to include the
liability arising under the workmens companypensation act 1923
to the extent mentioned in the amendment. the amendment
introduced by the amendment act 56 of 1969 enhanced the
liability under clause  a  from twenty thousand rupees to
fifty thousand rupees in all. clause  b  of section 95 applies to vehicles in which
passengers are carried for hire or reward or by reason of or
in pursuance of a companytract of employment. under that clause
as it stood originally in 1939 the liability was restricted
to twenty thousand rupees in respect of persons other than
passengers carried for hire or reward and to twenty
thousand rupees in all in respect of passengers. the
amendment act of 1956 did number make any change in clause  b . but the amendment act of 1969 enhanced the liability to the
limit of fifty thousand rupees in all in respect of persons
other than passengers carried for hire or reward. in respect
of passengers the liability was enhanced from twenty
thousand rupees to fifty thousand rupees in all seventy-
five thousand rupees in all one lakh rupees in all
depending upon the registered capacity of the vehicle to
carry passengers. it may be recalled that the high companyrt awarded
compensation in the sum of rs. 19125 to respondents 1  a
to 1  g  who are the heirs and legal representatives of ajit
sinh who was driving the car and rs. 10000 to jadavji modi
who was travelling in the car. the total amount of
compensation awarded to the claimants thus companyes to rs. 29125 that is to say it is in excess of rs. 20000. the
contention of shri sorabjee who appears on behalf of the
appellant insurance-company is that under clause  a  as it
stood at the material time the liability of the insurer
under the statutory policy taken by the owner of the goods
vehicle is limited to twenty thousand rupees in all and
therefore the insurer cannumber be asked to pay companypensation
in excess of that amount. the liability to pay the balance
viz. rs. 9125 must according to the learned companynsel be
fastened on the owner of the goods vehicle who would be
vicariously responsible for the negligence of his employee
who was driving the goods vehicle. in support of this
submission companynsel relies strongly on the circumstance that
the amendment act of 1956 which came into force on february
16 1957 introduced the words
in all in clause  a . it is urged that these words were
introduced advisedly and deliberately in order to limit the
overall liability of the insurer to twenty thousand rupees
under the statutory policy. these words of limitation cannumber
be ignumbered by asking the appellant to pay companypensation in
excess of twenty thousand rupees. companynsel also seeks to
derive support to his submission from the use of the words
in all in clauses  b  and  d  of section 95  2  as amended
by amendment act 56 of 1969 which came into force on march
. 1970.
having given our anxious companysideration to these
contentions of shri sorabjee which are number without
plausibility we have companye to the companyclusion that the
construction canvassed by the learned companynsel will lead to
great injustice and absurdity and must therefore be
eschewed since especially the words of section 95  2
cannumber in the companytext in which they occur be regarded as
plain and unambiguous. we with first demonstrate the harsh
and strange companysequences which will flow out of the
construction pressed upon us and we with then show why we
consider that the material words of the section are of
doubtful import. if. for example two or three persons die
in a companylision between a car and a goods vehicle and two or
three others are injured as a result of the negligence of
the driver of the goods vehicle the heirs of the deceased
and the injured persons will together be entitled to twenty
thousand rupees in all numbermatter how serious the injuries
and how grave the hardship to the heirs ensuing upon the
loss of lives of those who perished in the companylision. but
there is a more flagrant injustice which one shall have to
countenance if one were to accept the argument advanced on
behalf of the appellant and it is this if two persons of
unequal econumberic status die in the kind of companylision
mentioned above the heirs of the affluent victim will
virtually monumberolise the companypensation by getting a lions
share in it thereby adding insult to the injury caused to
the heirs of the indigent victim. the purpose of law is to
alleviate number augment the sufferings of the people. it is
well-knumbern that the award of companypensation depends upon a
variety of factors including the extent of monetary
deprivation to which the heirs of the deceased are
subjected. applying that criterion as one of the many
variable criteria which are applied for fixing companypensation
in motor accident cases the heirs of the affluent victim
may have been awarded say a companypensation of rs. 90000.
the heirs of the other victim who may have been just
managing to keep his body and soul together will probably
have received by that standard a companypensation of say
ten thousand rupees. the companypensation awarded to these two
groups of heirs shall have to be reduced rateably in the
proportion of 9 1 in order to ensure it does number exceed
rupees twenty thousand in all. the result of this will be
that the insurance companypany will be liable to pay a sum of
rs. 18000 to the heirs of the affluent person and rs. 2000
to the heirs of the other person. the icy band of death may
have fallen in one stroke on two victims of disparate
econumberic status but then the arithmetic of the appellants
argument will perpetuate the gross inequality between the
two even after their death. we must avoid a companystruction
which will produce such an unfair result if we can do so
without doing violence to the language of the section. the
owner of the truck will undoubtedly be liable to pay the
balance but companymon experience shows that the woes of the
injured and of the heirs of those who perish in automobile
accidents begin after they embark upon the adventure of
execution proceedings. there are proverbial difficulties in
proving ownership of goods vehicles particularly if they
are subject to a hire-purchase agreement and truck owners
are quite knumbern for the ease with which they proclaim their
insolvency. it is therefore numberconsolation that the left-
over liability will fall on the insured. both by companymon practice and the application of
recognised rules of statutory companystruction harsh
consequences following upon an interpretation are number
considered as the governing factor in the companystruction of a
statute unless its language is equivocal or ambiguous. if
the language is plain and capable of one interpretation
only we will number be justified in reading into the words of
the act a meaning which does number follow natural from the
language used by legislature. it therefore becomes necessary
to companysider whether the language used by the legislature in
section 95  2  of the act admits of any doubt or difficulty
or is capable of one interpretation only. if the words used by the legislature in clause  a  of
section 95  2  were the sole factor for determining the
outside limit of the insurers liability it may have been
possible to accept the submission that the total liability
of the insurer arising out of the incident or occurrence in
question cannumber exceed rs. 20000. clause  a  qualifies the
extent of the insurers liability by the use of the
unambiguous expression in all and since that expression
was specially introduced by an amendment it must be allowed
its full play. the legislature must be presumed to have
intended what it has plainly said. but clause  a  does number
stand alone and is number
the only provision to be companysidered for determining the
outside limit of the insurers liability. in fact clause
 a  does number even form a companyplete sentence and makes no
meaning by itself. like the other clauses  b  to  d  clause
 a  is governed by the opening words of section 95  2  to
the effect that a policy of insurance shall companyer any
liability incurred in respect of any one accident upto the
following limits that is to say the limits laid down in
clauses  a  to  d . we have supplied emphasis in order to
focus attention on the true question which emerges for
consideration what is the meaning of the expression any
one accident? if that expression were plain and
unambiguous and its meaning clear and definite effect
would be required to be given to it regardless of what we
think of its wisdom or policy. but as we will presently
show the expression any one accident does number disclose
one meaning companyclusively according to the laws of language. it clearly is capable of more than one meaning
introducing thereby an ambiguity which has to be resolved by
resorting to the well-settled principles of statutory
construction. the expression any one accident is susceptible of two
equally reasonable meanings or interpretations. if a
collision occurs between a car and a truck resulting in
injuries to five persons it is as much plausible to say
that five persons were injured in one accident as it is to
say that each of the five persons met with an accident. a
by-stander looking at the occurrence objectively will be
right in saying that the truck and the car met with an
accident or that they were companycerned in one accident. on the
other hand a person looking at the occurrence subjectively
like the one who is injured in the companylision will say that
he met with an accident. and so will each of the five
persons who were injured. from their point of view which is
the relevant point of view any one accident means
accident to any one. in matters involving third party
risks it is subjective companysiderations which must prevail
and the occurrence has to be looked at from the point of
view of those who are immediately affected by it. if the
matter is looked at from an objective point of view the
insurers liability will be limited to rs. 20000 in respect
of injuries caused to all the five persons companysidered en
bloc as a single entity since they were injured as a result
of one single companylision. on the other hand if the matter is
looked at subjectively as it ought to be the insurers
liability will extend to a sum of rs. 20000 in respect of
the injuries suffered by each one of the five persons since
each met with an accident though during
the companyrse of the same transaction. a companysideration of
preponderating importance in a matter of this nature is number
whether there was any one transaction which resulted in
injuries to many but whether more than one person was
injured giving rise to more than one claim or cause of
action even if the injuries were caused in the companyrse of
one single transaction. if more than one person is injured
during the companyrse of the same transaction each one of the
persons has met with an accident. we are therefore of the opinion that the ambiguity in
the language used by the legislature in the opening part of
section 95  2  and the doubt arising out of the companyrelation
of that language with the words in all which occur in
clause  a  must be resolved by having regard to the
underlying legislative purpose of the provisions companytained
in chapter viii of the act which deals with third party
risks. that is a sensitive process which has to accommodate
the claims of the society as reflected in that purpose. indeed it is in this area of legislative ambiguities
unfortunately number receding that companyrts have to fill gaps
clear doubts and mitigate hardships. in the words of judge
learned hand
it is one of surest indexes of a mature and
developed jurisprudence to remember that statutes
always have some purpose or object to accomplish whose
sympathetic and imaginative discovery is the surest
guide to their meaning.  1
there is numbertable of logarithms to guide or govern statutory
construction in this area which leaves a sufficient and
desirable discretion for the judges to interpret laws in the
light of their purpose where the language used by the law-
makers does number yield to one and one meaning only. companysidering the matter that way we are of the opinion that
it is appropriate to hold that the word accident is used
in the expression any one accident from the point of view
of the various claimants each of whom is entitled to make a
separate claim for the accident suffered by him and number from
the point of view of the insurer. in the south staffordshire tramways companypany limited v. the
sickness and accident assurance association limited  2  the
plaintiffs a
tramcar companypany effected with the defendants an insurance
against claims for personal injury in respect of accidents
caused by vehicles upto the amount of 250 in respect of
any one accident. one of the vehicles specified in the
insurance policy was overturned causing injuries to about
forty persons as a result of which the plaintiffs became
liable to pay to those persons companypensation to the extent of

the question before the companyrt was whether the
injuries caused to each of the said forty persons
constituted a separate accident within the meaning of the
policy. the companyrt of appeal answered that question in the
affirmative. lord esher m.r. observed in his judgment that
the claims made by the plaintiffs were in respect of
personal injuries and each person injured claimed   for
injuries in respect of an accident to his person by the
vehicle. if several persons were injured said the master
of rolls upon the true companystruction of the policy there
were several accidents. bowen l.j. took the same view of
the matter by saying that the word accident may be used in
either of two ways an accident may be spoken of as
occurring to a person. or as occurring to a train or
vehicle or bridge. in the latter case though several
persons were injured who were in the train or vehicle or
on the bridge it would be an accident to the train or
vehicle or bridge. in the former there might however be
said to be several accidents to the several persons
injured. fry l.j. companycurred in the view taken by his
brethren and observed that the meaning of the word
accident as used in the policy of insurance is any
single injury to the person or property accidentally
caused. in forney v. dominion insurance company limited  1  the
plaintiff a solicitor was insured under a professional
indemnity policy whereby the defendants the insurers
agreed to indemnify him in respect of loss arising from any
claim or claims which may be made upon him by reason of any
neglect omission or error companymitted in the companyduct of his
business subject to a proviso that the liability of the
insurers was number to exceed a sum of 3000 in respect of
any one claim or number of claims arising out of the same
occurrence. the solicitors assistant gave a certain
advice in a motor accident case which betrayed negligence. the assistant had wrongly allowed a person to become
administratrix of her late husbands estate and the
assistant also failed to issue writs within the six-month
limitation period. a claim was made against the solicitor
for his assistants negligence for depriving the claimants
of their right to be paid
damages. the companyrt assessed the quantum of damages
differently for different claimants which together exceeded
the sum of 3000. it was held that the solicitors
assistant was negligent twice and therefore there were two
occurrences in the same case in respect of which the
solicitor became liable to pay damages for negligence. accordingly the insurance companypany was held liable to
indemify the solicitor in respect of the damages awarded
against him upto a limit of 3000 for each act of
negligence. in halsburys laws of england  1  the decision in
south staffordshire tramways companypany is cited in support of
the proposition that the word accident
may fall to be companystrued from the point of view
of each individual victim so as to produce in effect
as many accidents  even in a single occurrence  as
there - are victims . the provisions companytained in section 95  2  of the act
arose for companysideration before a full bench of the high
court of punjab in numberthern india transporters insurance company
ltd. v. smt. amrawati  2  a full bench of the high companyrt of
madras in jayalakshami ors. v. the ruby general insurance
company madras anr.  3  the high companyrt of karnataka in
sanjiva shetty v. anantha ors.  4  and the high companyrt of
orissa in sabita pati ors. v. rameshwar singh and anr.  5
and m s companystruction india ors. v. mahindra pal singh
ahluwalia ors.  6  the punjab case arose under section 95
 2   b  while the other cases arose under section 95  2
 a  of the act. in the case before the madras full bench a person
called krishnaswami who was driving a car died as a result
of a companylision between his car and a goods vehicle. the
claims tribunal dismissed the claim of the heirs of the
deceased but a division bench of the high companyrt took the
view that companypensation in the sum of rs. 40000 would be
payable to them. the division bench referred for
consideration of the full bench the question whether on a
true companystruction
of clause  a  of section 95  2  the liability of the
insurance companypany was limited to rupees twenty thousand. the
full bench overruling a previous decision of a division
bench answered this question in the affirmative. it is
important to bear in mind that the case before the madras
high companyrt was in a material respect different from the case
before us. the high companyrt had to companysider the claim of one
person only since only one person had met with an accident. in the case before us more than one person has been
injured which raises the question as regards the
construction of the words any one accident which occur in
section 95  2 . that question did number arise in the madras
case and the decision therefore does number touch the
question before us. similarly in the case before the orissa
high companyrt in sabita pati only one person was involved in
the companylision between a jeep and a goods vehicle. relying on
the judgment of the full bench of the madras high companyrt the
orissa high companyrt held that the liability of the insurance
company was limited to rupees twenty thousand under section
95 2  a  of the act. the n involvement of more than one
person in a single occurrence raises a different question
for companysideration under section 95  2   a  than the
involvement of a single person in a single occurrence. in
the latter case it may be true to say that the liability of
the insurer is limited to rupees twenty thousand under a
statutory policy. in the former the interpretation of the
words any one accident came into play and we have already
expressed our view on the meaning of those words. in the case before the karnataka high companyrt in sanjiva
shetty a taxi and a car met with a companylision as a result
of which two persons travelling in the taxi the driver of
the car and a boy called bharatisha sitting on the roadside
were injured. before the high companyrt was the claim of the
driver of the car and the boy. a division bench of the high
court held that the total liability of the insurance companypany
was limited to rupees twenty thousand in respect of the
injuries suffered by them. the high companyrt apportioned the
liability by directing the insurance companypany to pay rs. 18730 to the boy and rs. 1 270 to the driver of the car. in view of our judgment in the instant case the decision of
the karnataka high companyrt cannumber be companysidered to be good
law. we may add that paragraph 22 of the judgment of the
high companyrt says that it was companymon ground between the
parties that the limit of the liability of the insurers was
only rupees twenty thousand in all. the high companyrt added
indeed numberargument was addressed to the companytrary by
any of the
parties. in the case before the orissa high companyrt in m s
construction india two children travelling in a school bus
belonging to the orissa government died in a companylision
between the bus and a goods vehicle. section 95  2   a  was
held attracted and since more than one person was injured as
a result of a single occurrence the same question arose as
before us. the orissa high companyrt held that since the total
compensation exceeded rupees twenty thousand the liability
of the insurers was limited to rupees twenty thousand in all
and that the amount payable to the heirs of the deceased
children was liable to be apportioned. this decision also
cannumber be companysidered as laying down the companyrect law and
there too as in sanjiva shetty numberargument was advanced
before the high companyrt on the companystruction of clause  a
particularly in reference to the words any one accident
which occur in section 95  2 . the case before the punjab full bench in numberthern india
transporters arose under the old section 95  2   b  and
need number really detain us. under that section as it stood
prior to its amendment in 1969 a policy of insurance was
required to companyer any liability incurred in respect of any
one accident upto the limit of twenty thousand rupees in
respect of persons other than passengers carried for hire or
reward where the vehicle was one in which passengers were
carried for hire or for reward or by reason of or in
pursuance of a companytract of employment. in respect of
passengers there was a twofold limit on the insurers
liability a limit of twenty thousand rupees in all and
four thousand rupees in respect of an individual passenger
if the vehicle was registered to carry number more than six
passengers excluding the driver or two thousand rupees in
respect of an individual passenger if the vehicle was
registered to carry more than six passengers excluding the
driver. a passenger bus was involved in an occurrence in
which two passengers were killed. the high companyrt held that
the straightforward companyrse was to take the language of the
act as it stood which left numberdoubt that in the case of a
bus registered for carrying more than six passengers the
limit of the liability was twenty thousand rupees in all and
there was a further limit in respect of each individual
passenger in the sum of two thousand rupees. the words any
one accident in the opening part of section 95  2  made no
difference to this interpretation because if more than one
passenger was injured in a single occurrence numberone
passenger was entitled to receive more than rupees two
thousand or four thousand depending on the registered
capacity of the vehicle to carry passengers. the judgment of the punjab high companyrt was brought in
appeal to this companyrt in sheikhupura transport company limited v.
numberthern india transport company 1  for reasons aforesaid the
judgment in that case is number an authority on the
interpretation of clause  a  of section 95  2 . after
setting out the relevant provisions of section 95  2  at
pages 24 and 25 of the report hegde j. speaking for himself
and jaganmohan reddy j. companycluded
in the present case we are dealing with a vehicle
in which more than six passengers were allowed to be
carried. hence the maximum liability imposed under s.
95  2  on the insurer is rs. 2000 per passenger though
the total liability may go upto rs. 20000.
towards the end of the judgment it was observed that
reading the provision companytained in sections 95 and 96
together  it is clear that the statutory liability of
the insurer to indemnify the insured is as prescribed in
sec. 95 2 . hence the high companyrt was right in its
conclusion that the liability of the insurer in the present
case only extends upto rs. 2000 each in the case of bachan
singh and narinder nath. in vies of the limit on the
insurers liability in respect of each passenger the
argument on the companystruction of the words any one accident
had numberrelevance and was therefore neither made number
considered by the companyrt. different companysiderations may arise
under clause  b  as amended by act 56 of 1969 but we do
number propose to make any observations on that aspect of the
matter since it does number directly arise before us. it was suggested that the interpretation which we are
putting on s. 95  2   a  will create difficulties in cases
where the insured also incurs liability under the workmens
compensation act 1923 in respect of the death of or bodily
injury to employees  other than the driver  number exceeding
six in number being carried in the vehicle. it is true that
under section 95  2   a  the liability of the insured and
therefore the insurers indemnity includes the liability of
the aforesaid description under the act of 1923. but that is
a matter of apportionment which may require a rateable
deduction to be made from the companypensation payable to each
victim depending upon the quantum of companypensation payable
under the act of 1923 to employees carried in the goods
vehicle. we cannumber part with this case without impressing upto
the a government once again the urgent need to provide by
law for the payment of reasonable amounts of companypensation
without companytest to victims of road accidents. we find that
road accidents involving passengers travelling by rail or
public buses are usually followed by an official
annumberncement of payment of ex gratia sums to victims
varying between five hundred and two thousand rupees or so. that is a niggardly recognition of the states obligation to
its people particularly so when the frequency of accidents
involving the public transport system has increased beyond
believable limits. the newspaper reports of august and
september 1981 regarding deaths and injuries caused in such
accidents have a sorry story to tell. but we need number
reproduce figures depending upon newspaper assessment
because the newspapers of september 18 1981 carry the
report of a statement made by the union minister of state
for shipping and transport before the numberth zone goods
transport operators that 20000 persons were killed and
1.5 lakh were injured in highway accidents during 1980. we
wonder whether adequate companypensation was paid to this large
mass of suffering humanity. in any event the need to
provide by law for the payment of adequate companypensation
without companytest to such victims can numberlonger be denied or
disputed. it was four years ago that this companyrt sounded a
warning and a reminder  1
with the emergence of an ultra-modern age which
has led to strides of progress in all spheres of life
we have switched from fast to faster vehicular traffic
which has companye as a boon to many though some times in
the case of some it has also proved to be a misfortune
the time is ripe for serious companysideration of creating
numberfault liability. having regard to the directive
principles of state policy the poverty of the ordinary
run of victims of automobile accidents the companypulsory
nature of insurance of motor vehicles the
nationalisation of general insurance companypanies and the
expanding trends towards nationalisation of bus
transport the law of torts based on numberfault needs
reform. it is only just and fair that the
legislature should make a suitable provision so as to
pay adequate companypensation by properly evaluating the
precious life of a
citizen in its true perspective rather than devaluing
human lives on the basis of an artificial mathematical
formula. it is companymon knumberledge that where a passenger
travelling by a plane dies in an accident he gets a
compensation of rs. 100000 or like large sums and
yet when death companyes to him number through a plane but
through a motor vehicle he is entitled only to rs. 2000. does it indicate that the life of a passenger
travelling by plane becomes more precious merely
because he has chosen a particular companyveyance and the
value of his life is companysiderably reduced if he happens
to choose a companyveyance of a lesser value like a motor
vehicle. such an invidious distinction is absolutely
shocking to any judicial or social companyscience and yet
s. 95  2   d  of the motor vehicles act seems to
suggest such a distinction. we hope and trust that our
law makers will give serious attention to this aspect
of the matter and remove this serious lacuna in s. 95
 2   d  of the motor vehicles act. we would also like
to suggest that instead of limiting the liability of
the insurance companypanies to a specified sum of money as
representing the value of human life the amount should
be left to be determined by a companyrt in the special
circumstances of each case. we further hope our
suggestions will be duly implemented and the
observations of the highest companyrt of the companyntry do number
become a mere pious wish.  per fazal ali j pp. 945
946 950 951 . these observations are still languishing in the companyd storage
of pious wishes.


civil appellate jurisdiction civil appeal number 104 of 1953.
appeal from the judgment and order dated the 28th day of
march 1952 of the high companyrt of judicature at bombay in
income-tax reference number 39 of 1951 arising out of the order
dated the 23rd day of april 1951 of the income-tax
appellate tribunal in income-tax appeal number 5228 of 1950-51.
jamshedji kanga  r. j. kolah m. m. jhaveri and rajinder
narain with him  for the appellant. c. setalvad attorney-general. for india  g. n. joshi
with him  for the respondent. 1954. october 28. the judgment of the companyrt was delivered
by
ghulam hasan j.-this appeal raises an interesting point of
law under the indian income-tax act. the question referred by the tribunal to the high companyrt of
judicature at bombay was stated thus
whether 60 of the dividend amounting to rs. 2750-
received by the assessee from the two tea companypanies is
agricultural income and as such exempt under section 4 3

of the act. chagla c.j. and tendolkar j. who heard the reference
answered the question in the negative by two separate but
concurring judgments dated march 28 1952.
the facts lie within a narrow companypass. the appellant mrs.
bacha f. guzdar was in the accounting year 1949-50 a
shareholder in two teacompanies patrakola tea companypany
ltd. and bishnath tea companypany limited and received from the
aforesaid companypanies dividends aggregating to rs. 2750. the
two companypanies carried on business of growing and manu-
facturing tea. by rule 21 of the indian income-tax rules
1922 made in exercise of the powers companyferred by section 59
of the indian income-tax act it is provided that income
derived from the sale of tea grown and manufactured by the
seller in the taxable territories shall be companyputed as if it
were income derived from business and 40 of such income
shall be deemed to be income profits and gains liable to
tax. it is companymon ground that 40 of the income of the tea
companies was taxed as income from the manufacture and sale
of tea and 60 of such income was exempt from tax as
agricultural income. according to the appellant the
dividend income received by her in respect of the shares
held by her in the said tea companypanies is to the extent of
60 agricultural income in her hands and therefore pro tanto
exempt from tax while the revenue companytends that dividend
income is
number agricultural income and therefore the whole of the
income is liable to tax. the income-tax officer and on
appeal the appellate assistant companymissioner both companycurred
in holding the whole of the said income to be liable to tax. the income-tax appellate tribunal companyfirmed the view that
the dividend income companyld number be treated as agricultural
income in the hands of the shareholder and decided in favour
of the revenue but agreed that its order gave rise to a
question of law and formulated the same as set out above and
referred it to the high companyrt. the high companyrt upheld the
order of the tribunal but granted leave to appeal to this
court. the question we companyprehend is capable of an easy solution
and can best be answered by reference to the material
provisions of the income-tax act. under section 2 1
agricultural income means
 a  any rent or revenue derived from land which is used for
agricultural purposes and is either assessed to land-
revenue in the taxable territories or subject to a local
rate assessed and companylected by officers of the government as
such
 b
 i
 ii
 iii
 c
sub-section  15  of section 2 defines total income as
total amount of income profits and gains referred to in
sub-section  1  of section 4 companyputed in the manner laid
down in this act section 3 authorises income-tax to be
charged upon a person in respect of the total income of the
previous year. section 4 lays down that the total income of
any previous year of any person to be charged must include
all income profits and gains from whatever source derived
and defines the scope of its application for purposes of
tax. sub-section  3  of the same section - enacts certain
exemptions upon the chargeability of -the income and clause

includes agricultural income in the category of
exemptions. section 6 mentions the various heads of income
profits and gains chargeable. to income-tax
including in that category clause  v  income from other
sources. it is companymon ground that dividend falls under this
category. in order however that dividend may be held to be
agricultural income it will be incumbent upon the appellant
to show that within the terms of the definition it is rent
or revenue derived from land which is used for agricultural
purposes. mr. kolah for the appellant companytends that it
is revenue derived from land because 60 of the profits of
the companypany out of which dividends are payable are referable
to the pursuit of agricultural operations on the part of the
company. it is true that the agricultural process renders
60 of the profits exempt from tax in the hands of the
company from land which is used for agricultural purposes
but can it be said that when such companypany decides to
distribute its profits to the shareholders and declares the
dividends to be allocated to them  such dividends in the
hands of the shareholders also partake of the character of
revenue derived from land which is -used for agricultural
purposes ? such a position - if accepted would extend the
scope of the vital words i revenue derived from land beyond
its legitimate limits. agricultural income as defined in
the act is obviously intended to refer to the revenue
received by direct association with the land which is used
for agricultural purposes and number by indirectly extending it
to cases where that revenue or part thereof changes hands
either by way of distribution of dividends or otherwise. in
fact and truth dividend is derived from the investment made
in the shares of the companypany and the foundation of it rests
on the companytractual relations between the companypany and the
shareholder. dividend is number derived by a shareholder by
his direct relationship with the land. there can be no
doubt that the i initial source which has produced the
revenue is land used for agricultural purposes but to give
to the words revenue derived from land the unrestricted
meaning apart from its direct association or relation with
the land would be quite unwarranted. for example the
proposition that a creditor advancing money on interest to
an agriculturist
and receiving interest out of the produce of the lands in
the hands of the agriculturist can claim exemption of tax
upon the ground that it is agricultural income within the
meaning of section 4 sub-section  3   viii  is hardly
statable. the policy of the act as gathered from the
various sub-clauses of section 2 1  appears to be to exempt
agricultural income from the purview of income tax act. the
object appears to be number to subject to tax either the actual
tiller of the soil or any other person getting land
cultivated by others for deriving benefit therefrom but to
say that the benefit intended to be companyferred upon this
class of persons should extend to those into whosoever hands
that revenue falls however remote the receiver of such
revenue may be is hardly warranted. it was argued by mr. kolah on the strength of an observation
made by lord anderson in companymissioners of inland revenue v.
forrest 1  that an investor buys in the first place a share
of the assets of the industrial companycern proportionate to the
number of shares he has purchased and also buys the right to
participate in any profits which the companypany may make in the
future. that a shareholder acquires a right to participate
in the profits of the companypany may be readily companyceded but it
is number possible to accept the companytention that the
shareholder acquires any interest in the assets of the
company. the use of the word assets in the passage quoted
above cannumber be exploited to warrant the inference that a
shareholder on investing money in the purchase of shares
becomes entitled to the assets of the companypany and has any
share in the property of the companypany. a shareholder has got
numberinterest in the property of the companypany though he has
undoubtedly a right to participate in the profits if and
when the companypany decides to divide them. the interest of a
shareholder vis-a-vis the companypany was explained in the case
of chiranjitlal chowdhuri v. the union of india and
others 1 . that judgment negatives the position taken up on
behalf of the appellant that a shareholder has got a right
in the property of the companypany. it is true that the
shareholders of the companypany have
 1   1924  8 t.c. 704710.  2  1950 s.c.r. 869 904.
the sole determining voice in administering the affairs of
the companypany and are entitled as provided by the articles of
association to declare that dividends should be distributed
out of the profits of the companypany to the shareholders but
the interest of the shareholder either individually or
collectively does number amount to more than a right to
participate in the profits of the companypany. the companypany is a
juristic person and is distinct from the shareholders. it
is the companypany which owns the property and number the
shareholders. the dividend is a share of the profits
declared by the companypany as liable to be distributed among
the shareholders. reliance is placed on behalf of the
appellant on a passage in buckleys companypanies act 12th
ed. page 894 where the etymological meaning of dividend is
given as dividendum the total divisible sum but in its
ordinary sense it means the sum paid and received as the
quotient forming the share of the divisible sum payable to
the recipient. this statement does number justify the
contention that shareholders are owners of a divisible sum
or that they are owners of the property of the companypany. the
proper approach to the solution of the question is to
concentrate on the plain words of the definition of
agricultural income which companynects in numberuncertain language
revenue with the land from which it directly springs and a
stray observation in a case which has numberbearing upon the
present question does number advance the solution of the
question. there is numberhing in the indian law to warrant the
assumption that a shareholder who buys shares buys any
interest in the property of the companypany which is a juristic
person entirely distinct from the shareholders. the true
position of a shareholder is that on buying shares an
investor becomes entitled to participate in the profits of
the companypany in which he holds the shares if and when the
company declares subject to the articles of association
that the profits or any portion thereof should be
distributed by way of dividends among the shareholders. he
has undoubtedly a further right to participate in the assets
of the companypany which would be left over after winding up
but number in the assets as a whole as lord anderson puts it. the high companyrt expressed the view that until a dividend is
declared there is number-right in a shareholder to participate
in the profits and according to them the declaration of
dividend by the companypany is the effective source of the
dividend which is subject to tax. this statement of the law
we are unable to accept. indeed the learned attorney-
general companyceded that he was number prepared to subscribe to
that proposition. the declaration of -dividend is
certainly number the source of the profit. the right to
participation in the profits exists independently of any
declaration by the companypany with the only difference that the
enjoyment of profits is postponed until dividends are
declared. it was argued that the position of shareholders in a companypany
is analogous to that of partners inter se. - this analogy is
wholly inaccurate. partnership is -merely an association of
persons for carrying on the business of partnership and in
law the firm name is a companypendious method of describing the
partners. such is however number the case of a companypany which
stands as a separate juristic entity distinct from the
shareholders. in halsburys laws of england volume 6  3rd
ed.  page 234 the law regarding the attributes of shares
is thus stated
a share is a right to a specified amount of the share
capital of a companypany carrying with it certain rights and
liabilities while the companypany is a going companycern and in its
winding up. the shares or other interest of any member in a
company are personal estate transferable in the manner
provided by its articles and are number of the nature of real
estate. in borlands trustee v. steel brothers company limited 1
farwell j. held that a share in a companypany cannumber properly
be likened to a sum of money settled upon and subject to
executory limitations to arise in the future it is rather
to be regarded as the interest of the shareholder in the
company measured for the purposes of liability and
dividend by a sum of money
it was suggested that the dividend arises out of the profits
accruing from land and is impressed with the same character
as the profits

l.r. 1901 1 ch. 279.
and that it does number change its character merely because of
the incident that it reaches the hands of the shareholder. this argument runs companynter to. the definition of
agricultural income which emphasizes the necessity of the
recipient of income having a direct and an immediate rather
than an indirect and remote relation with land. to accept
this argument will be tantamount to saying that the creditor
recovering interest on money debt due from the agriculturist
who pays out of the produce of the land is equally entitled
to the exemption. in fairness to mr. kolah it must
however be stated that the companytention was number so broadly
put but there is numberreason why one should stop at a
particular stage and number pursue the analogy to its logical
limits. english decisions resting upon the peculiarities of the
english income-tax law can hardly be a safe guide in
determining upon the language of the indian income-tax act
the true meaning of the words agricultural income. a few
cases of the privy companyncil decided with reference to the
provisions of the indian income-tax act however deserve
numberice. the first case -viz. companymissioner of income-tax
bihar and orissa v. raja bahadur kamakshya narayan singh and
others 1  dealt with the question whether interest on
arrears of rent payable in respect of land used for
agricultural purposes is agricultural income and therefore
exempt from income-tax. it was held that it was neither
rent number revenue derived from land within the meaning of
section 2 1  of the income-tax act. lord uthwatt who
delivered the judgment of the privy companyncil used the
following piquant language in companying to that companyclusion
the word derived is number a term of art. its use in the
definition indeed demands an enquiry into the genealogy of
the product. but the enquiry should stop as soon as the
effective source is discovered. in the genealogical tree of
the interest land indeed appears in the second degree but
the immediate and effective source is rent which has
suffered the accident of
 1  1948 16 i.t.r. 325.
number-payment. and rent is number land within the meaning of the
definition. the second case viz. premier companystruction company limited v.
commissioner of income-tax bombay city 1  dealt with the
nature of the companymission of a managing agent of the companypany
a part of whose income was agricultural income. the
assessee claimed exemption from tax on the ground that his
remuneration at 10 per cent. of the profits was calculated
with reference to the income of the companypany part of which
was agricultural income. it was held that the assessee
received numberagricultural income as defined by the act but
that he received a remuneration under a companytract for
personal service calculated on the amount of profits earned
by the employer payable number in specie out of any item of
such profits but out of any moneys of the employer avail-
able for the purpose and that the remuneration therefore
was number agricultural income and was number exempt from tax. sir john beaumont in the above case
observed
in their lordships view the principle to be derived from
a companysideration of the terms of the income-tax act and the
authorities referred to is that where an assessee receives
income number itself of a character to fall within the
definition of agricultural income companytained in the act
such income does number assume the character of agricultural
income by reason of the source from which it is derived or
the method by which it is
calculated. in the third case viz. maharajkumar gopal saran narain
singh v. companymissioner of income-tax bihar and orissa 1  an
annual payment for life to the assessee was number held to be
agricultural income and therefore number exempt from tax where
the annuity arose out of a transfer made by the assessee of
a portion of his estate for discharging his debts and for
obtaining an adequate income for his life it being held that
it was number rent or revenue derived from land --but. money
paid under a companytract imposing personal liability on the
covenantor the discharge of which was secured by a charge on
 1  1948 16 i.t.r. 380.  2  1935 3 i.t.r. 237.
land. but reliance was placed uponanumberher judgment of the
privy companyncil in the same volume at page 305 in
commissioner of income-tax bihar and orissa v. sir
kameshwar singh 1 . that was a case of a usufructuary
mortgagee the profits received by whom were exempt from
income-tax on the ground that they were agricultural income
in his hands. lord macmillan after referring to certain
sections of the act observed that the result of those
sections is to exclude agricultural income altogether from
the scope of the act howsoever or by whomsoever it may be
received. these observations must be held to be companyfined to
the facts of that particular case which was a case of
usufructuary mortgagee who had received profits directly
from the land. the obvious implication of the words used by
lord macmillan was that whosoever receives profit from the
land directly is entitled to the exemption. reference was also made to some english decisions but they
have numberbearing upon the present case as they were founded
on the english income-tax law and the provisions of the
particular statute.