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SUPREME COURT OF INDIA
R.S. SARKARIA, P.S. KAILASAM AND O. CHINNAPPA REDDY, JJ.
State of U.P. and another, Appellants
Versus
Buland Sugar Co. Ltd., Rampur, Respondent.
Civil Appeal No. 2281 of 1969, D/-27-2-1979.
Advocates appeared
M/s. Shiv Pujan Singh and M. V. Goswami Advocates, for Appellants; M/s B. P. Maheshwari and Suresh Sethi, Advocates, for Respondent.
U. P. Agricultural Income-tax Act – Sections 16, 18, 2, 4 – Partnership Deed – U. P. Agricultural Income-tax Act was applied to the areas which formed part of the erstwhile State of Rampur on 1st July, 1950 – Assessing Authority issued notices under Section 16 (4) of U. P. Agricultural Income-tax Act to Raza Ltd. and Buland Ltd. for furnishing returns of their agricultural incomes for the years 1357 F. to 1361 F – It may be noted that the notice was not issued to the Agricultural Company, Rampur – Raza Ltd. and the Buland Ltd. submitted their returns – Assessing Authority assessed two companies to agricultural income-tax for years concerned – Companies preferred an appeal against the assessment to Commissioner, Rohilkhand Division, and also filed writ Petition in High Court of Allahabad challenging the assessment orders – Writ petition was allowed and order of assessment was quashed with a direction that fresh assessments may be made – Commissioner also directed Assessing Authority to make fresh assessments in light of the observations made by High Court in its judgment allowing writ petition – Held, Plea cannot be allowed to be taken in proceedings after remand. The objection was taken only before the Assessing Authority after remand. – It is true that in the proceedings before the Assessing Authority the assessment relating to two Fasli years 1362 and 1363 which did not form part of the proceedings before the High Court was also taken up. But here again the returns were submitted by the two companies on the basis of their respective income. – It cannot be said that the tax authorities were in error in assessing tax on the returns submitted by the two companies. – Plea, therefore, that assessment on the two companies, in the absence of proceedings against the firm of which the companies were partners, is not legal cannot be upheld. – Court do not think it desirable to remit the case to High Court for the determination of this question as the matter has been long pending. – This plea has been elaborately considered by the Assessing Authority which has pointed out that agreements with Raza Sugar Co. Ltd. and Buland Sugar Co. Ltd., show that it was stipulated that Rampur State shall from time to time grant to the Company lease of agricultural land. – It was further provided that such fair equitable land revenue as may be agreed between Rampur State and Company shall be payable in respect of such land and shall be subject to revision by agreement every 15 years. – Lease also provided that fair and equitable water rates and cesses shall be payable in respect of land. – In Section 4 (7) of U. P. Land Revenue Act it is mentioned that word "Mal Guzari" will be applicable where it has been duly assessed or has been determined by means of an auction or by any other means. – On a consideration of all relevant facts Assessing Authority came to the conclusion that agreement in favour of companies provided for payment of land revenue and word "rent" used in leases has to be considered in relation to original agreements and as such it is seen that agreement provided for payment of land revenue. – Counsel appearing for the respondents was unable to challenge correctness of finding of Assessing Authority. – On a consideration of all facts that were placed before Assessing Authority, court do not see any reason for not accepting conclusion arrived at by Authority – This issue also court find against assessee. – Appeal Allowed
Judgment
KAILASAM, J.:- This appeal is by the State of U. P. by special leave granted by this Court against the judgment and order of the High Court at Allahabad in Special Appeal No. 978 of 1962.
2. Two companies, the Raza Sugar Co. Ltd. and the Buland Sugar Co. Ltd., were incorporated under the Rampur State Companies Act, 1932. Messrs. Govan Brothers (Rampur) Ltd. were the common managing agents of the two companies. On 10th May, 1933 the Raza Ltd. and on 11th December, 1934, the Buland Ltd. entered into agreements with the erstwhile State of Rampur. The agreements provided that the Rampur State should grant to the companies leases of agricultural land with adequate irrigation facilities suitable for cultivation of sugarcane. The companies were required to pay fair and equitable land revenue which was to be agreed upon by the companies and the Rampur State. On 5th May, 1935, a partnership deed was executed by the Raza Ltd. and the Buland Ltd. constituting a partnership firm of the two companies in equal shares known as the Agricultural Company, Rampur. In the year 1939 the Rampur State leased 2,000 acres of land and in the year 1946 another 2,000 acres of land to the Agricultural Company, Rampur. In 1949 the State of Rampur acceded to the Union of India and was merged with the State of Uttar Pradesh with effect from 1st December, 1949. The Rampur State had agreed to exempt the Raza Ltd. and the Buland Ltd. from all taxes for a period of 15 years from the date of commencement of their business.
3. The U. P. Agricultural Income-tax Act was applied to the areas which formed part of the erstwhile State of Rampur on 1st July, 1950. The Assessing Authority issued notices under Section 16 (4) of the U. P. Agricultural Income-tax Act to the Raza Ltd. and the Buland Ltd. for furnishing returns of their agricultural incomes for the years 1357 F. to 1361 F. It may be noted that the notice was not issued to the Agricultural Company, Rampur. The Raza Ltd. and the Buland Ltd. submitted their returns. The Assessing Authority assessed the two companies to agricultural income-tax for the years concerned. The companies preferred an appeal against the assessment to the Commissioner, Rohilkhand Division, and also filed writ Petition No. 2385 of 1959 in the High Court of Allahabad challenging the assessment orders. On 17th April, 1961 the writ petition was allowed and the order of assessment was quashed with a direction that fresh assessments may be made. The Commissioner also directed the Assessing Authority to make fresh assessments in the light of the observations made by the High Court in its judgment dated 17th April, 1961, allowing the writ petition No. 2385 of 1959.
4. When the Assessing Authority started fresh hearing in pursuance of the order of the High Court an objection was raised with regard to the assessability of the two companies on the ground that no notice had been sent to the Agricultural Company, Rampur. The Assessing Authority negatived the plea and assessed the Raza Ltd. and the Buland Ltd. for the years 1357F to 1361F and also for the years 1362 F to 1363 F. Against the order of the Assessing Authority the two companies which in the meantime became amalgamated as the Raza Buland Sugar Co. Ltd., Rampur, filed a writ. petition No. 1982 of 1962 in the High Court of Judicature at Allahabad and prayed for the quashing of the assessment order dated 29th June, 1962, made by the Assessing Authority against the Raza Ltd. and the Buland Ltd. for the assessment years 1357 F to 1363 F.
5. The writ petition was heard by a single Judge of the High Court who by his order dated 4th October, 1962 allowed the writ petition on the ground that the Assessing Authority committed an error of law in assessing the two partners of the Agricultural Company, Rampur, and not assessing the firm as such. Aggrieved by the order the State filed Special Appeal No. 978 of 1962 before the Division Bench of the High Court at Allahabad. The Division Bench of the Hi
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