Patna High Court
Sailendra Narayan Bhanj Deo vs Assistant Collector Of Agricultural ... on 15 March, 1955
Equivalent citations: [1956]30ITR801(PATNA)
JUDGMENT
MOHAPATRA, J. - This is a reference by Sri B. Sivaraman, I. C. S., Member (C. T.), Board of Revenue, Orissa under section 29(2) of the Orissa Agricultural Income-tax Act, 1947, in respect of two points of law arising out of the order of the Assistant Collector of Agricultural Income-tax, dated 11th April 1952. The assessment years are 1950-51 and 1951-52. The two points of law referred to us are as follows :
"(i) Whether on the facts and in the circumstances of the case, the repairing charges of the building of the assessee at Raj Kanika amounting to Rs. 10,088 are admissible ?
(2) Whether on the facts and in the circumstances of the case, the petitioner is entitled to a further deduction of Rs. 4,505-14-0 towards the maintenance allowance of the lady constitutes maintenance allowance within the meaning of the Orissa Agricultural Income-tax Act 1947 ?"
2. We will immediately take up the first question. The assessee is Raja of Kanika. It is too well-known a fact that he is one of the biggest landlords of Orissa, his estate extending over nearly 400 square miles and that he has substantial agricultural income even though he has also other sources of income. The present question is with reference to the exemption from agricultural income-tax under section 6(f) of the Orissa Agricultural Income-tax Act, 1947, of the repairing charges of the big residential buildings of the assessee situate at Raj Kanika. The relevant portions of section 6 are as follows :
"6. The agricultural income-tax referred to in sub-clause (1) of clause (a) of section 2 shall be deemed to be the sum realised in the previous year on account of agricultural income mentioned in the said sub-clause (1) after making the following deduction :
(f) the amount paid in the previous year on account of the repairs to any capital assets used in connexion with the collection of rents due in respect of the land from which such agricultural income is derived."
3. It is to be mentioned here that the assessee while submitting his return before the Agricultural Income-tax Officer prayed for a deduction of one third of the repairing charges. But through an affidavit filed before the Assistant Collector of Agricultural Income-tax in appeal, he claimed deduction of the entire repairing charges amounting to Rs. 10,088. The Assistant Collector found : "the contention that this part of the building was untilised as capital assets in connexion with the collection of rents does not seem to have been disputed by the learned assessing officer." But he did not allow the deduction even of one-third of the repairing charges on account of the reason that no income from this building was taken in this assessment, and as such the repairing charges incurred for the same cannot be allowed as a deduction. Manifestly this is the reason which is completely beside the point. The Member, Board of Revenue, referring the case, has, however, found, disagreeing with the Assistant Collector, that the assessee is entitled to a deduction of one third of the repairing charges.
4. Mr. Dhal, appearing on behalf of the Agricultural Income-tax Authority, also concedes that the assessee is entitled to a deduction of one-third of the above repairing charges, but opposes the claim of the assessee for deduction of the entire charges on the ground that the entire building was not used in connexion with collection of rents due in respect of the land from which such agricultural income is derived. Indeed the building consists of commodious bed-rooms, drawing-room, billiard-room and guest-house, and it is not disputed that a substantial part of it is also used as head office for the collection of rents from the zamindaries of the assessee. What is necessitated by clause (f) of section 6, in order that the assessee may get a deduction of the repairing charges, is that the capital assets or the buildings, as in the present case are used in connexion with the collection of rents due in respect of the land from which such agricultural income is derived. It is manifest to us that the residence of the assessee is one to the uses in connexion with the collection of rents due in respect of the land. Once we find that the buildings are really the residential buildings of the land-owner and, as such used in connexion with the collection of rents due in respect of the land, as it is necessary for the land-owner to supervise over the collection of rents due from the tenants residing in a vast estate, in our opinion, the condition necessary to bring the case under clause (f) of section 6 is satisfied and the entire repairing charges are to be deducted. In the present case the estate is considerably large and the building is situate within the estate. There is no doubt in our mind if the land-owner requires the house for his residence in connexion with the collection of rents, it is open to the assessee to have his own residential buildings according to his own ideas of comforts. Such ideas differ from man to man and amongst men of different status. The assessee has got the liberty to build his house with all equipments and facilities of modern comforts and may therefore have a drawing-room, a dining-room a billiard-room and a decent house for guests. If of course the assessee is desirous of living a very simple life without caring for modern comforts he may have his building according to his own fashion. It is certainly not for the Income-tax Authorities to enquire what exactly would be the portion of the house necessary for the residence of the land-owner for the purpose of collection of rents due in respects of land. The Agricultural Income-tax Authorities cannot certainly sit in judgment over the ideas of the assessee to build his own house for his own comfortable living. It is sufficient that he requires a suitable residence for the purpose of collection of rents from his zamindaries. As his residence is necessary for the collection, if he resides in the house, he uses it for the purpose of collection as contemplated under clause (f) of section 6.
5. The matter came up before their Lordships of the Patna High Court in the case of Maharajadhiraj of Darbhanga v. Commissioner of Income-tax, Bihar and Orissa. The assessee there was the Maharajadhiraj of Darbhanga having commodious extensive buildings for his use and part of them being meant even for European guests. The Maharajadhiraj or Darbhanga was admittedly in that case a great land-owner and he claimed exemption from general income-tax, the notional income of his residential buildings under section 2(1) (c) of the Indian Income-tax Act, 1922. Under section 2(1) (c), "agricultural income" for the purpose of the Act includes any income derived from any building owned and occupied by the receiver of the rent or revenue of any such land, that is, agricultural land, provided that the building is on or in the immediate vicinity of the land, and is building which the receiver of rent or revenue, by reason of his connection with the land, requires as a dwelling house, or as a store-house or other out-building. Sir Dawson Miller, C.J., decided the case in favour of the assessee observing "once it is shown that by reason of the assessees connexion with the land he requires a dwelling house in that vicinity then we are not concerned to enquire whether the dwelling house is more commodious than other persons in the same position would consider sufficient for their actual needs, a matter about which opinion might widely differ." His Lordship further observed : "it is not open to the Commissioner to consider whether the particular class of house is more or less than the actual requirements of a zamindar in his position according to some standard which may vary from time to time in the opinion of different Income-tax Commissioners." This decision again came up for being tested before a Full Bench of the Patna High court consisting of five judges in the case of Rajendra Narayan Bhanja Deo v. Commissioner of Income-tax, Bihar and Orissa. It is important to observe that this very residential house of the Raja of Kanika was also the subject matter of reference before the Full Bench. The then Raja of Kanika, Rajendra Narayan Bhanj Deo, being the assessee, pressed for exemption from general income-tax, the notional income of the entire buildings at Raj Kanika house for his residential purposes under the proviso to clause (c) of sub-section (1) to section 2 of the Indian Income-tax Act 1922, as being agricultural income. In affirming the decision of Sir Dawson Miller, C.J., Sir Courtney-Terrell, C.J., observed as follows : The assessee, the Raja of Kanika, derives rather more than one-half of his large income from agricultural rents. He has a residential palace upon his estate which extends over about 400 square miles, in which certain quarters are allotted to certain of his zamindari staff." The moment they, the Authorities, find that the house is required by reason of dwelling house, or store house, or other house, it is beyond their jurisdiction to determine what portion of the building is or should be required by reason of his position as a receiver of rent or revenue. Indeed the language used in section 2(1) (c) of the Income-tax Act is not exactly the same as the language use in the Orissa Agricultural Income-tax Act in section 6(f). But, in our opinion, the difference in language does not affect the principle laid down by their Lordships of the Patna High Court while deciding the Full Bench case. Three other Judges of the Bench (Ross, Wort and Kulwant Sahay, JJ.) agreed with the view of Courtney Terrell, C.J., Macpherson, J., alone differing.
6. It will be pertinent to refer to a Special Bench decision of the same High Court while construing similar provisions of the Bihar Agricultural Income-tax Act, 1938. The Special Bench case is Province of Bihar v. Kamakhaya Narayan Singh. The case was for deduction of the depreciation charges at the prescribed rate in respect of the capital asset. Clause (i) of section 6 of the Bihar Agricultural Income-tax Act, 1938, runs thus :
"Depreciation at the prescribed rate in respect of any capital asset purchased or constructed after the commencement of the Act for the benefit of the land from which such agricultural income is derived or for the purpose of deriving such agricultural income from such land." While construing the above provisions, Manohar Lall and Sharer, JJ., constituting the majority of the Special Bench followed the aforesaid two decisions of the Patna High Court, and affirmed the view that it is not open for the Income-tax Authorities to enquire which part or parts of the residential buildings are necessary for agricultural purposes and which part or parts of the buildings were constructed for non-agricultural purposes. Manohar Lall, J., while following the aforesaid Full Bench decision observed that the decision stood as good law for a very long time, and when the legislature did not link it to make clear by appropriate expression in the section itself that such apportionment is permissible, the depreciation value of the entire building must be deducted.
Last of all we may refer to a Bench decision of the Patna High Court, Sir Kameswar Singh v. State of Bihar, where the question arose whether the money spent on the repairs of the Rajas buildings at Darbhanga and the substantial amount paid on account of municipal tax in respect of the same buildings could be deducted under the provisions of clause (g) of section 6 of the Bihar Agricultural Income-tax Act, 1948.
The clause runs thus :
"any expense incurred exclusively on the maintenance of any capital asset purchased or constructed before this Act came into force if such maintenance is required in connection with the collection of rents due in respect of the land from which such agricultural income is derived." Their Lordships felt bound by the Special Bench decision referred to above and had therefore to answer the reference accordingly in favour of the assessee even though Sarjoo Prosad, J., (as he then was) expressed in his judgment that he had hesitation in following the Special Bench decision on account of the difference in language of section 6(g) of the Bihar Act and section 2(1) (c) of the Indian Income-tax Act. With respect to the learned Judges, we are of the view that the difference in language of the two provisions is not such as to affect the principle decided by the Full Bench decision of the Patna High Court and followed by the Special Bench while deciding the case under the Bihar Agricultural Income-tax Act.
8. Mr. Dhal however contends that when the assessee had himself prayed for a deduction of one-third of the repairing charges before the Agricultural Income-tax Officer he cannot be allowed to claim a deduction of the entire repairing charges. We see no force in this contention inasmuch as in the return submitted by the assessee what is mentioned is only for a deduction of "one-third of the repairing charges of the palace amounting to Rs. 10,088 that is, Rs. 3,362." This is clearly based upon misapprehension of the position of law which cannot be conclusive as against him, if on proper determination of the position of law he is found to be entitled to a larger amount and he rectifies his mistake by filing an affidavit before the Assistant Collector of Agricultural Income-tax.
9. In conclusion, therefore our answer to the first question is that on the facts and in the circumstances of the case the entire repairing charges of the buildings of the assessee at Raj Kanika amounting to Rs. 10,088 is to be deducted under section 6(f) of the Orissa Agricultural Income-tax Act, 1947.
10. I will now take up question No. 2. The assessee claims a deduction of Rs. 12,000 as maintenance allowance of the widow of the previous proprietor. This sum of Rs. 12,000 includes actual monthly payment to the widow herself of a sum of Rs. 500 towards maintenance. The balance is claimed as expensed made by the assessee on behalf of the widow of the previous proprietor on items like doctors fees, costs of medicines and expenses on religious ceremonies. These expenses have as a matter of fact been transferred to the account book containing maintenance allowance of the widow. The Department have allowed deduction of Rs. 6,000 only as it was actually paid to the widow as maintenance allowance, but have disallowed the other expensed made on behalf of the widow as they were not actually paid to the widow as provided in the Orissa Agricultural Income-tax Rules, 1948. So this question is regarding the expenses made on behalf of the widow under the headings "doctors fees, costs of medicine etc.", amounting to Rs. 4,505-14-0. Section 6 of the Orissa Agricultural Income-tax Act 1947, enumerates different items that are to be deducted from the agricultural income of the assessee in the previous year. Clause (k) of the section is the residuary clause running as follows : "such other deductions as may be prescribed". The relevant rule prescribing the deduction is contained in the Orissa Agricultural Income-tax Rules 1948. Section 3(2) runs as follows :
(2) In addition to the deductions specifically allowed under section 6, the following deduction provided under clause (k) of that section shall be allowed :
Maintenance allowance actually paid to the following members of the proprietors family owning an impartible estate, provided that the aggregate of the allowances so paid shall not exceed one-fifth of the net income of the estate, namely,
(b) the widow of a previous proprietor so long as she does not remarry :
The deduction claimed does not manifestly exceed one-fifth of the net income of the estate. There is no question about the position that in fact this amount was actually spent on behalf of the widow of the previous proprietor for her necessities. There is no doubt about the genuineness of the account showing the transfer of these items to the maintenance allowance of the widow. Medical expenses and the expenses for essential religious ceremonies according to the status of the widow are well within the meaning of the maintenance expenses. The only contention made by the Department is that the assessee is not entitled to deduction of this amount as the amount was not "actually paid" as used in the rule itself. In our opinion, the construction proposed by the Department is too narrow to be accepted. The term "actually paid" will also include the money actually spent on behalf of the widow for her benefit towards her maintenance expenses. If we accept the construction proposed by Mr. Dhal appearing on behalf of the Department, if the widow without actually receiving the amount of allowance directs to speed it in a particular way towards her maintenance expenses and in fact the money is so spent at her maintenance expenses. If we accept the construction proposed by Mr. Dhal, appearing on behalf of the Department, if the widow without actually receiving the amount of allowance directs to spend it in a particular way towards her maintenance expenses and in fact the money is so spent for the without not actually spent. We may in this connexion refer to the meaning of the word "maintenance" given in Iyers Law Lexicon, 1940 Edition, page 767 :
"Maintenance also means of subsistence, supply of necessaries and conveniences; aid, support, assistance; the support which one person who is bound by law to do so, gives to another for his living (Bouvier L. Dict.)"
For the above reasons, the second question is answered that a further sum of Rs. 4,505-14-0 spent by the assessee on the subsistence, supply of necessaries and conveniences for the lady and transferred to the maintenance allowance of the lady constitutes maintenance allowance within the meaning of the Orissa Agricultural Income-tax Act, 1947.
II. The reference is disposed of accordingly. The assessee is entitled to costs of this Court. Hearing fee is assessed at one hundred rupees (Rs. 100).
Misra, J. - I agree.
Reference answered accordingly.