Judgement

Appeal (No. 90 of 1928) from two judgments or orders of the High Court (March 14, 1927, and May 11, 1927) upon a reference under s. 66, sub-s. 2, of the Indian Income-tax Act, 1922.

The three questions referred are set out in the judgment of the Judicial Committee. The ten items mentioned in question I. were (1.) Jalkar or rents received from fisheries ; (2.) Ground rent from land used for potteries; (3.) Ground rent from land used as brick fields ; (4.) Fees received from the tying up of boats against the assessees land; (5.) Fees received from lands used for storing purchases of crops (paiali); (6.) Fees received from cart stands ; (7.) Punyaha nazar or nazar paid by tenants of agricultural holdings at the beginning of the zamindari year; (8.) Nazar for petitions presented to the zamindar dealing with questions of succession, settlement, and partition; (9.) Ground rent for permanent shops at hats and bazars ; (10.) Stall fees paid by temporary (daily) sellers at hats and bazars.

On May 21, 1926, Sanderson C.J. and Rankin J. referred questions II. and III. to the Full Bench, as there were conflicting decisions of two Division Courts with regard to the point in question III. In Emperor v. Probhat Chandra Barua (( 1924) I. L. R. 51 C. 504.) it was held by Rankin J. (Page J. dissenting) that income derived from a permanently settled estate was liable to income-tax notwithstanding the permanent settlement regulations, the view of Rankin J. prevailing under clause 36 of the letters patent; while in King-Emperor v. Indu Bhusan Sarkar (( 1926) 1. L. R. 53 C. 524.) Cuming and Page JJ. held that where income from fisheries within an estate was included in assets upon which the jama had been assessed at the permanent settlement, that source of income was not liable to assessment to income-tax.

The learned judges of the Full Bench delivered judgment on March 14, 1927. The majority of the Court (Ghose, Buckland and Panton JJ.), in a judgment delivered by Ghose J., answered both questions II. and III. in the affirmative. The judgment of the minority (Mukerji and Suhrawardy JJ.) was delivered by Mukerji J.; they held that question III. should be answered in the negative, and that therefore question II. did not arise. The proceedings are reported at I. L. R. 54 C. 863.

The reference then went back to the Division Bench (Rankin C.J. and Majumdar J.) for decision upon question I. The learned judges delivered judgment on May 11, 1927, holding that none of the items of income set out were " agricultural income5? so as to be exempt under s. 4, sub-s. 3 (viii.).

1930. March 21, 25, 27, 28; April 1, 3, 4, 7, 9, 10. E. B. Raikes K.C., G. D. McNair and Graham Dixon for the appellant. The third question is fundamental and should be considered first. It is submitted that the imposition of income-tax upon income arising from a permanently settled estate is contrary to guarantees and assurances given at the permanent settlement and contained in the Bengal regulations. By Ben. Reg. I. of 1793, s. 3, the zamindars were notified that the jama on their lands was " fixed for ever," and s. 7 declared that no demand should ever be made by the Government for an augmentation of the assessment in consequence of the improvement of the estate ; by Ben. Reg. II. the " public demand " upon each estate was no longer to be liable to variation. [Reference was made also to Reg. VIII. of 1793, s. 49, and Reg. II. of 1819, ss. 1, 2.] The question, or the same question as to the corresponding Madras regulation, has recently been considered in the following cases, in addition to that now under appeal Commissioner of Income-tax v. Zamindar of Singampatti (( 1922) I. L. R. 45 M. 518.) ; Emperor v. Probhat Chandra Barua (( 1924)

I. L. R. 51 C. 504.) ; Maharajadiraj of Darbhanga v. Commissioner of Income-tax (( 1924) I. L. R. 3

P. 470.) ; Emperor v. Indu Bhusan Sarkar. (( 1926) I. L. R. 53 C. 524.) There was a substantial balance of judicial opinion in favour of the vi