Back
1960 Supreme(SC) 297
SUPREME COURT OF INDIA
23rd November, 1960
S.K. DAS, M. HIDAYATULLAH AND J.C. SHAH, JJ.
Srish Chandra Sen and others, Appellants
Versus
Commissioner of Income-tax, West Bengal, Respondent.
Civil Appeal No. 405 of 1957. 488
Advocates appeared
Mr. S. Mitra, Senior Advocate, (M/s. B. Das and S. N. Mukerji, Advocates, with him), for Appellants (Nos.. 2 to 41); M/s. A. N. Kripal and D. Gupta, Advocates, for Respondent.
A.N.KIRPAL, B.DAS, D.GUTPA, S.MISHRA, S.N.MUKHERJEE
Redemption of land revenue by a lump sum payment has the effect of cancelling the assessment to land revenue, and a conveyance by the Secretary of State vesting the land in the Justices can free the land from land revenue assessment in perpetuity.
Headnote:
INCOME TAX - Agricultural income - Land used for agricultural purposes - Whether assessed to land revenue - Redemption of land revenue by lump sum payment - Effect - Interpretation of conveyance by Secretary of State - Whether land freed from land revenue assessment.
Fact of the Case:
The assessee, Srish Chandra Sen, derived income from land leased to him by the Justices of the Peace for the Town of Calcutta. The land was acquired by the Government in 1864 under the Calcutta Municipal Act, VI of 1863, and vested in the Justices in 1870. The Justices redeemed the land revenue payable on the land by a lump sum payment in 1866. The assessee claimed that the income from the land was exempt from income tax under Section 4(3)(viii) of the Indian Income-tax Act, 1922, as it was derived from land used for agricultural purposes which continued to be assessed to land revenue.
Finding of the Court:
The Court held that the land was not assessed to land revenue within the meaning of Section 2(1)(a) of the Indian Income-tax Act, 1922, and therefore the income from the land was not exempt from income tax. The Court found that the redemption of the land revenue by a lump sum payment had the effect of cancelling the assessment to land revenue, and that the conveyance by the Secretary of State vesting the land in the Justices freed the land from land revenue assessment in perpetuity.
Issues: 1. Whether the land was assessed to land revenue within the meaning of Section 2(1)(a) of the Indian Income-tax Act, 1922? 2. Whether the redemption of the land revenue by a lump sum payment had the effect of cancelling the assessment to land revenue? 3. Whether the conveyance by the Secretary of State vesting the land in the Justices freed the land from land revenue assessment in perpetuity?
Ratio Decidendi: 1. The Court held that the land was not assessed to land revenue within the meaning of Section 2(1)(a) of the Indian Income-tax Act, 1922, because the redemption of the land revenue by a lump sum payment had the effect of cancelling the assessment to land revenue. 2. The Court found that the redemption of the land revenue by a lump sum payment had the effect of cancelling the assessment to land revenue, because the payment was equal to the capitalised value of the land revenue, and the deed of conveyance by the Secretary of State vesting the land in the Justices stated that the land was "free and clear and for ever discharged from all Government land revenue whatever or any payment or charge in the nature thereof." 3. The Court held that the conveyance by the Secretary of State vesting the land in the Justices freed the land from land revenue assessment in perpetuity, because the deed of conveyance stated that the land was "free and clear and for ever discharged from all Government land revenue whatever or any payment or charge in the nature thereof."
Final Decision: The Court dismissed the assessee's appeal, holding that the land was not assessed to land revenue within the meaning of Section 2(1)(a) of the Indian Income-tax Act, 1922, and therefore the income from the land was not exempt from income tax.
Judgment
HIDAYATULLAH, J. : The point involved in this appeal is a very short one; but it requires a long narration of facts to reach it. The appeal is against the judgment and order of the High Court of Calcutta dated May 15, 1956, arising out of an Income-tax Reference.
2. By the Calcutta Municipal Act, VI of 1863, there was established a Corporation under the name of "The Justices of the Peace for the Town of Calcutta." By a notification issued on November 2, 1864, one square mile of land forming part of the Panchannagram Estate was acquired by the Government of Bengal at the instance of the Justices. Section CXII of the Municipal Act provided that the Justices might "agree with the owners of any land for the absolute purchase thereof........... for any other purpose whatever connected with the conservancy of the Town". Under Sec. CXIII, it was provided that if there was any hindrance to acquisition by private treaty, the Government of Bengal upon the representation of the Justices would compulsorily acquire the land and vest such land in the Justices on their paying compensation awarded to the proprietor. The action which was taken by the notification was under Sec. CXIII of the Municipal Act, and the acquisition was under Act, VI of 1857, an Act for the acquisition of land for public purposes.
3. The Panchannagram Estate was permanently settled under Regulation I of 1793. After the acquisition, the proprietor of Panchannagram Estate was granted abatement of land revenue assessed on the Estate to the extent of Rs. 386-7-1. This represented the proportionate land revenue on the land acquired.
4. In August, 1865, the Justices were required to pay Rs. 54,685-2-10 as compensation payable to the proprietor and to other persons holding interest in the land. Another piece of land which is described as an open level sewer, was also acquired about the same time, and separate compensation was paid for it. With the amount of conveyance charges, the total compensation thus paid by the Justices was Rs. 57,965-8-10. On October 27, 1865, the Government called upon the Justices to pay a further sum of Rs. 7,728-13-8. This order has not been produced in the case; but from other correspondence, it is easy to see that the amount represented an amount capitalised at 20 years purchase of land revenue attributed to the area acquired, which, as has been stated above, came to Rs. 386-7-1. This payment was made on or about January 12, 1866. Similarly, another amount was paid in July of the same year for redemption of the land revenue in respect of the strip of land for the open sewer.
5. On December 5, 1870, a conveyance was executed by the Secretary of State in favour of the Justices of the Peace. It was there stated, inter alia:
"Whereas the Honourable the Lieutenant Governor of Bengal hath thought fit that the said land so acquired as aforesaid would be vested in the said Justices of the Peace for the Town of Calcutta a Corporation created by and authorised to hold land under the said Act, No. VI of 1863 of the Council of the Lieutenant Governor of Bengal to the end and intent that the said land may be held by the said Justices for a public purpose, namely, for the conservancy of the Town....... and subject in every way to the same Act but free and discharged from all payment of land revenue, land tax and all and every tax or imposition in the nature of revenue derivable from land payable to Government in respect thereof; NOW THIS INDENTURE WITNESSETH............................. to hold the said pieces of land, hereditaments and premises intended to be conveyed with the appurtenances except as aforesaid unto the said Justices of the Peace for the Town of Calcutta and their successors for ever free and clear and for ever discharged from all Government land revenue whatever or any payment or charge in the nature thereof to the end and intent that the said land may be used for a public purpose namely for the conservancy of the town upon the trusts and
