COMMISSIONER OF INCOME TAX, HYDERABAD vs NAWAB MIR BARKAT ALI KHAN BAHADUR

The Supreme Court ruled that the settlor-assessee is entitled to the same tax exemption as the beneficiary under the Indian Income-tax Act, 1922. The Court held that the agreement with the Government of India provided a general exemption from income-tax for the payment of Rs. one lac, irrespective of whether it was received by the beneficiary or the settlor. The Court affirmed the High Court's decision that the settlor stood in the shoes of the original beneficiary and was entitled to the tax exemption on the income received from the trust.