Patna High Court
The Province Of Bihar vs Maharani Janki Kuer. on 8 January, 1947
Equivalent citations: [1947]15ITR360(PATNA)
JUDGMENT
MANOHAR LALL, J. - This is a reference by the Bihar Board of Agricultural Income-tax under Section 25 (2) for the opinion of this Court as to whether certain claims should be allowed to the assessee out of his agricultural income.
The assessment year is 1941-42. The assessment has been made upon the Bettiah Estate under the Court of Wards through its manager.
Claim No. 1. - The assessee pays Rs. 3,96,354 as land revenue to the Government. The assessing authorities have disallowed Rs. 17,662, in this way. They find that the total agricultural and non-agricultural income of the assessee was Rs. 29,82,263 in the previous year and that this included Rs. 1,33,412 as the sair or non-agricultural income. Therefore they have calculated the share of the revenue payable for non-agricultural income at Rs. 17,662. The assessing authorities profess to follow the decision of their Lordships of the Judicial Committee in the celebrated case of Raja Probhat Chandra Barua. In that case the question decided was that non-agricultural income derived from lands in permanently settled estates was chargeable to tax under the Indian Income-tax Act of 1922. Lord Russell of Killowen in delivering the judgment of the Board observed at page 5 : "Their Lordships were unable to ascertain upon what footing the appellant had been assessed in respect of the income derived from his zamindari, i.e., whether on the gross income or after some allowance had been made in respect of the jama assessed and paid upon the lands. Their Lordships are of opinion that, in assessing the appellant to income-tax in respect of the income derived from his zamindari, his income, profits and gains from that source should be computed after making proper allowance in respect of the jama assessed and paid." It should be observed that in the Indian Income-tax Act there is no special section which allows a deduction on account of the jama paid upon the land from which non-agricultural zamindary income is derived. It is only under Section 9 which deals with the head "Property" that by sub-clause (v) a deduction is permissible on account of land revenue. But non-agricultural zamindari income is taxable not under the head "Property" but under "Other sources." For this reason their Lordships followed the general principles which require or allow such a deduction to be made.
In the present case, however, there is a statutory direction in Section 6 of the Bihar Agricultural Income-tax Act, 1938 (hereinafter to be referred to as the Act). Under Section 6(a) of the Act a deduction has to be made of "the sum actually paid in the previous year as revenue to the Crown or as rent to a landlord in respect of the land from which such agricultural income is derived." The assessee claims that there is no warrant for the procedure adopted by the Agricultural Income-tax Officer by which he calculated a proportion of the land revenue as being attributable to the land from which agricultural income is derived. I agree with this contention. The agricultural income is derived by the assessee from all the villages which are subject to the payment of land revenue as assessed at the time of the permanent settlement. It is not permissible to dissect the lands comprised in the villages and then find out that so much of the land yielded agricultural income and the remainder non-agricultural income. Upon the plain words of the section, the assessee, in my opinion, is entitled to claim a deduction. The claim must be allowed.
Claim No. 2. - The amount received as rent distribution fee and mutation fee on the transfers of a part of the holding has been included in the assessable income. Land distribution fees are payable to the landlord under Section 88(a) of the Bihar Tenancy Act. The agricultural income-tax authorities have followed the Full Bench decision of this Court in the case of Rajendra Narayan Bhanja Deo, where it was held that mutation fees paid to a landlord upon succession to a holding or a tenure by inheritance are agricultural income. Non convincing argument has been advanced by the assessee to induce us to hold that decision is incorrect. In my opinion, the assessing authorities have rightly held that this amount is agricultural income. I would disallow the claim of the assessee under this head.
Claim No. 3. - The assessee has not been allowed full costs of repairs and maintenance of certain buildings. The items are set out at page 23 of the paper-book and may be reproduced here :
Item No. Nature Amount Remarks Rs. A. P. I Repairs and maintenance of power house 2,064-4-0 The supplies of electric energy to all the offices at Bettiah connected with Collection of Agricultural income.
II.
Repairs and wiring of estate buildings.
446-14-0 These are offices connected with the above purpose.
VIII.
Repairs of Amarkhana.
90-7-0 In this agricultural produce received from is stocked.
XI.
Veterinary hospital repairs.
200-0-0 This is for treatment of sick cattle used in agriculture.
XIII.
Repairs to palace 89-0-0 This stable is used for keeping horses used in conveying officers of the estate going to office.
XVI.
Repairs to elephant line at Bettiah.
203-0-0 In rainy season elephant are used for collection purpose.
XX.
Repairs to Forest Officers Bunglow.
132-0-0 The Forest Officer does additional duty in collecting agricultural income.
XXI Repairs to elephant 143-0- 0 Vide item No. (XVI).
XXIII.
Repairs to estate bungalow at Motihar.
797-0-0 This is an inspection bunglow where Manger and other officers stay during inspection of Village papers and other work in connection with agricultural income.
By Section 6(g) of the Act the assessee is entitled to deduct "any expense incurred 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." In my opinion all these items come within Section 6(g) of the Act as they are necessary to be maintained for proper discharge of the duties of the officers who have to supervise and collect the agricultural income. The assessing authorities, in my opinion, were wrong in disallowing this claim of the assessee. The Commissioner was wrong in thinking that the repairs of power house, estate buildings, palace stables, elephant line etc., could not be held to be required for the collection of the rent. I would allow this claim.
Claim No. 4. - The assessing authorities have included in the assessable income the amount realised by the assessee as damages against the trespassers who were in wrongful occupation of pieces of land of the estate in the previous year. The assessee claims that these are not income within the meaning of the Act. I do not agree with this contention. The income is derived by the assessee from the land in the occupation of the persons who wrongfully took possession of his land and whom he was forced to treat as tenants and from whom he recovered damages in lieu of rent. This claim of the assessee has been rightly disallowed.
The decision of the assessing authorities on the other heads was not challenged before us.
Having regard to the fact that the assessee has succeeded in the substantial part of his claim, he is entitled to three-quarters of the costs of this Court, and he will also get a hearing fee of Rs. 200. He is also entitled to the return of the fees of Rs. 100 which he deposited with the Board as fee for reference to this Court.
MEREDITH, J. - I agree.
SHEARER, J. - I agree.
Reference answered accordingly.