Back
SUPREME COURT OF INDIA
S.K. Das, A.K. Sarkar and M. Hidayatullah, JJ.
Maharaja Sir Pateshwari Prasad Singh (In all the Appeals) - Appellant
Versus
State of Uttar Pradesh (In all the Appeals) - Respondent
Civil Appeals Nos. 611 to 613 of 1961
Decided On : 28-03-1963
AGRICULTURAL INCOME TAX - Uttar Pradesh Agricultural Income Tax Act, 1949 - Section 3, Schedule, Part I, Condition (b), Rule 17 - Interpretation - Exemption from agricultural income tax - Conditions - Approval of institutions or funds by State Government - Grant to hospitals - Scholarships to students - Whether donations to institutions or funds - Validity of Rule 17.
Fact of the Case:
The appellant, the proprietor of the Balrampur Estate, was subjected to agricultural income tax under the Uttar Pradesh Agricultural Income Tax Act, 1949, for the years 1355, 1356, and 1357F. He claimed exemption from agricultural income tax for sums paid to charities. The appellant contended that the maximum tax payable under the Act was subject to a condition specified in the Schedule of Rates, and that his liability was limited to half the amount by which his total agricultural income exceeded Rs. 3000. He also claimed exemption for charities made by him which satisfied the definition of "charitable purpose" in the Explanation to Rule 17, even though the funds and institutions on which the benefit of the charities had been conferred had not been approved by the State Government.
Finding of the Court:
The Court held that the condition in the Schedule of Rates was applicable only to agricultural income tax and not to super-tax. It also held that the approval of institutions or funds by the State Government was a condition precedent to the grant of an exemption under Rule 17, and that the inspection of hospitals and dispensaries by Government medical officers did not constitute a grant within the meaning of the notification under Rule 17. The Court further held that scholarships paid to students through an institution recognized by the State Government or a local authority were donations within the meaning of Rule 17, and that the amount paid to an institution earmarked for scholarships could be treated as a donation to the institution within the meaning of Rule 17.
Issues: 1. Whether the condition in the Schedule of Rates was applicable to agricultural income tax and super-tax. 2. Whether the approval of institutions or funds by the State Government was a condition precedent to the grant of an exemption under Rule 17. 3. Whether the inspection of hospitals and dispensaries by Government medical officers constituted a grant within the meaning of the notification under Rule 17. 4. Whether scholarships paid to students through an institution recognized by the State Government or a local authority were donations within the meaning of Rule 17. 5. Whether the amount paid to an institution earmarked for scholarships could be treated as a donation to the institution within the meaning of Rule 17.
Ratio Decidendi: 1. The condition in the Schedule of Rates was applicable only to agricultural income tax and not to super-tax, as the context required that the definition of "agricultural income tax" in Section 2(2) should not be imported into condition (b) of Part I of the Schedule. 2. The approval of institutions or funds by the State Government was a condition precedent to the grant of an exemption under Rule 17, as the rule required not only that the payment should be to an institution or fund established for a charitable purpose but that institution or fund must also be approved by the State Government for the purpose of the rule. 3. The inspection of hospitals and dispensaries by Government medical officers did not constitute a grant within the meaning of the notification under Rule 17, as the word "grant" in the notification meant grant in cash, kind, or even in services, but it should be a real grant in the form of a donation. 4. Scholarships paid to students through an institution recognized by the State Government or a local authority were donations within the meaning of Rule 17, as the institution utilized the payment for its own purpose, namely helping students which it may otherwise have done with its own funds. 5. The amount paid to an institution earmarked for scholarships could be treated as a donation to the institution within the meaning of Rule 17, as the institution had the benefit of the payment though indirectly through its students.
Final Decision: The appeals were decided according to the answers given by the Court. There was no order as to costs.
JUDGMENT :
Sarkar, J.
1. The appellant before us was the proprietor of the well-known Balrampur Estate, in the State of Uttar Pradesh. He was subjected to agricultural income tax under the Uttar Pradesh Agricultural Income Tax Act, 1949, for the years 1355, 1356 and 1357F. Various proceedings arose out of the assessment orders, but it is unnecessary to burden this judgment by referring to them. The appellant appealed from the original orders of assessment and those appeals having failed, filed revision petitions-against the appellate orders, but those were also unsuccessful. He then got a large number of questions of law referred to the High Court under Section 24 of the Act. The present appeal arise out of the High Court answer to those questions. There are three appeals now before us one in respect of each of the said three years.
2. In these appeals only five questions have been canvassed. They related to different matters and their nature can be understood only when they are stated. But shortly put, the first question raises a point that the appellant's liability is subject to, maximum specified in a certain provision of the Act to which we will presently refer. The remaining four questions concern the appellant's claim for exemption out of his income of sums paid to charities.
3. The first question with which we propose to deal was Question 5 before the High Court. It was in these terms:
"Whether condition (b) in the Schedule of Rates is applicable to Part I alone or to both Parts I and II."
The question is really one of the interpretation of the Act, to some of the provisions of which it is necessary to refer before proceeding further. Sub-Section (2) of Section 2 defines "agricultural income tax" is "tax payable under this Act and includes, super tax". Section 3 is the charging Section and the relevant portion of it is as follows: "Agricultural income tax and super-tax at the rate or rates specified in the schedule shall be charged for each year..."Now the Schedule so far as material runs thus:
SCHEDULE
(See Section 3)
Rates of agricultural income tax
PART I
(a) In the case of every individual the basic rates of agricultural income tax will be as follows:
Rate
1 On the first Rs. 1500 of total agricultural income Nil
2 On the next Rs. 3500 of total agricultural income One anna in the rupee.
3 On the next Rs. 10,000 of total agricultural income One and a half annas in the rupee.
4 On the next Rs. 10,000 of total agricultural income Three annas in the rupee.
5 On the balance of total agricultural income Four annas in the rupee.
PART II
(A)In the case of every individual ... the basic rates of agricultural super-tax shall be as follows;
(Various rates on various slabs of income are mentioned varying from one anna in the rupee on the income of Rs. 10,000 above Rs. 25,000 to five and a quarter annas in the rupee in.; respect of incomes over and above Rs. 1,50,000.)
4. The contention of the appellant is that "agricultural income tax" mentioned in condition (b) in Pert I of the schedule must be read in terms of the definition in Section 2(2) and hence as including super-tax. He, therefore, says that the total amount of tax under both these heads payable by him under the Act can in no case exceed half the amount by which his total agricultural income exceeds Rs. 3000. Two reasons are given in support of this contention. The first is what we have already mentioned, namely, the reason based on the definition of the term "agricultural income tax". The second reason is that if "agricultural income tax" was not so understood, then relief granted by condition (b) would be available to a very small number of assessees, being those whose income varied between Rs. 3000 and Rs. 3214 per annum.
5. It does not seem to us that either of these reasons is well-founded. Taking the second reason first, it may be stated that it is conceded on behalf of the respondent State that if the words "agricultural income tax" in condition (b) do not include super-tax, then o
AI
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
