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1964 Supreme(Kar) 29
Karnataka High Court
Judges : K.S.Hegde,Mir Iqbal Husain
M.L.NARASIMHIAH SETTY - Appellant
Versus
AGRICULTURAL INCOME-TAX OFFICER, CHIKMAGALUR - Respondent
Writ Petition 913 Of 1959
Decided On : 04/09/1964
The main legal point established in the judgment is that the 'dividends' received by the assessees in the relevant 'previous years' in respect of coffee delivered to the Coffee Board in prior years cannot be considered as their agricultural income of the year in which the 'dividends' were received. The judgment also emphasizes that the 'act' could only tax the income 'derived' from lands which are situate in the present Mysore State.
Headnote:
Agricultural Income - Mysore Agricultural Income-tax Act, 1957 - Section 64, Section 4 - The court considered whether the 'dividends' received by the assessees in the relevant 'previous years' in respect of coffee delivered to the Coffee Board in prior years can be considered as their agricultural income of the year in which the 'dividends' were received. The court analyzed the provisions of the Mysore Agricultural Income-tax Act, 1957, and the previous Act, and held that the 'dividends' received in that regard cannot be considered as 'derived' during the year 1957-58. The court also held that the State cannot claim any tax in respect of the income derived in the years to which the compositions relate, and that the 'act' could only tax the income 'derived' from lands which are situate in the present Mysore State.
Fact of the Case:
The petitioners challenged the inclusion of 'dividends' received from the Coffee Board in their agricultural income for the assessment years, arguing that the 'dividends' did not represent income 'derived' from their agricultural lands during the 'previous year' and that the State had no right to claim tax on the income derived in the years to which the compositions relate. They also contended that the 'act' could only tax the income 'derived' from lands in the present Mysore State.
Finding of the Court:
The court found that the 'dividends' received in respect of coffee delivered to the Coffee Board in prior years cannot be considered as agricultural income of the year in which the 'dividends' were received. The court also held that the State cannot claim tax on the income derived in the years to which the compositions relate, and that the 'act' could only tax the income 'derived' from lands in the present Mysore State.
Issues: The issues involved in the case were whether the 'dividends' received by the assessees in the relevant 'previous years' in respect of coffee delivered to the Coffee Board in prior years can be considered as their agricultural income of the year in which the 'dividends' were received, and whether the State had the right to claim tax on the income derived in the years to which the compositions relate.
Ratio Decidendi: The court held that the 'dividends' received in that regard cannot be considered as 'derived' during the year 1957-58. The court also held that the State cannot claim any tax in respect of the income derived in the years to which the compositions relate, and that the 'act' could only tax the income 'derived' from lands which are situate in the present Mysore State.
Final Decision: The court directed the respondent to forbear from levying tax under the 'act' on the 'dividends' received by the petitioners from the Coffee Board for the coffee delivered in prior years. The court also quashed the impugned order of assessment and directed the respondent to pay the costs of the petitioners.
( 1 ) THESE petitions raise more or less common question of law. The principal question that arise for consideration is whether the "dividends" received by the assessees in the relevant "previous years" in respect of coffee delivered to the coffee Board in prior years can be considered, for the purpose of agricultural income-tax, as their agricultural income of the year in which the "dividends" were received. The concerned Agricultural Income-tax Officers have taken or appears to take the view that the "dividends" in question should be considered as the agricultural income of the assessees in the year of their receipt.
( 2 ) THE petitioners in these petitions except in W. P. No. 913 of 1959 prayed for writs of mandamus or mandatory directions to the concerned Agricultural Income-tax Officer, to forbears from levying or collecting taxes under the Mysore Agricultural Income-tax Act, 1957. On their cash receipts ("dividends") relating to their coffee crop of 1955-56 or earlier seasons and delivered to the Coffee Board before October 13, 1957, the date on which the Mysore agricultural Income-tax Act, 1957, came into force. In W. P. No. 913 of 1959 the petitioner had already been assessed holding that the "dividends" received by him during the relevant "previous year" was a part of his agricultural income of that year.
( 3 ) IT will convenient if we first deal with W. P. No. 499 of 1961 (M/s. Volkart Bros. , Tellicherry v. The Agricultural Income-tax Officer, Chickmagalur) and thereafter apply the principals decided in that case to the facts of the other cases.
( 4 ) IN none of these cases, the facts are in dispute. One Sri B. Narayana Rao, the Internal Auditor of M/s. Volkart Bros. , Tellicherry, had filed an affidavit in support of the application, W. P. No. 499 of 1961, wherein he has set out the relevant facts.
( 5 ) MESSRS. Volkart Bros. (a registered partnership firm) have their branch officer at Tellicherry, in the State of Kerala. They have also Coffee plantations in the State of Mysore. Their karadibetta Estate is situate in Hassan district. In Chickmagalur District, they own Arabidacool estate. The then Mysore Legislature enacted the Mysore Agricultural Income-tax Act, 1955 (Mysore Act No. 4 of 1955) to be referred to hereinafter as the "previous Act" : the said Act received the assent of the Rajpramukh on May 3, 1955. Section 3 of that Act is the charging section. It prescribed that agricultural income-tax at the rate or rates specified in part I of the schedule to that Act shall be charged for each financial year commencing from the 1st April, 1955, in accordance with and subject to the provisions of that Act, on the total agricultural income of the "previous year" of every person. Section 5 provided for the computation of agricultural income of a person after giving deductions as provided therein. Section 7 provided that agricultural income shall be computed for the purpose of section 5 and 6 in accordance with the method of accounting regularly employed by the assessee. Chapter IV provided for return of income, assessment, etc. Section 64 of that Act is important for our purpose. Section 64 (1) is as follows :
"64. (1) Any person who derives agricultural income from land not exceeding five thousand acres in extent of the first class of land or an extent equivalent thereto consisting of any one or more of the lasses of land specified in part II of the schedule, may apply to the prescribed officer for permission to compound the agricultural income-tax payable by him and to pay in lieu thereof a lump sum at the rates specified in part III of the schedule in respect of the first class of land. "
( 6 ) SUB-SECTION (3) of that section says that the prescribed officer, after satisfying himself that the particulars specified in the application are correct, shall grant the permission prayed for, by an order in writing. Sub-section (5) of that section reads :
" (5) The permission granted under sub-section (3
